Market to stay cautious ahead of Sebi meet and October 2007 derivatives expiry

The market is expected to stay cautious ahead of October 2007 series derivatives expiry and Securities Exchange Board of India (Sebi) meet. Global cues were mixed. US markets edged lower on Wednesday, 24 October 2007. Asian markets posted gains today, 25 October 2007.

Volatility is expected to remain high as October 2007 derivatives contracts expire today, 25 October 2007. As per market data, marketwide rollover of derivative positions from October 2007 series to November 2007 series was 61% while Nifty rollover was 60%.

The Securities Exchange Board of India (Sebi)’s board meets today, 25 October 2007, to take a decision on recently announced proposals. It may be recalled that on 16 October 2007, Sebi had proposed curbs on issuance of offshore derivative instruments (ODIs), also known as participatory (P) notes, based on assets under management of FIIs and prohibited sub-accounts of FIIs from issuing P notes.

The market regulator Sebi, after trading hours on Monday, 22 October 2007, provided partial breather to foreign institutional investors (FIIs) with respect to proposed restrictions on use of participatory notes and said it would speed up regulatory clearance for foreigners keen to invest transparently.

The Reserve Bank of India's (RBI) mid-term review of annual policy due on 30 October 2007 and US Federal Reserve’s meeting on 31 October 2007 on interest rates, will be key events that will drive the market in the near term.

Asian markets were trading with gains today, 25 October 2007. Hong Kong's Hang Seng (up 1.39% at 29,740.01), Japan's Nikkei (up 0.21% at 16,393.14), Taiwan's Taiwan Weighted (up 1.11% at 9,547.09), Singapore's Straits Times (up 0.69% at 3,674.40) and South Korea's Seoul Composite (up 1.13% or at 1,955.28) edged higher.

The Dow Jones industrial Average recovered from sharp early losses of over 200 points yesterday, 24 October 2007, as Merrill Lynch posted dreadful result hinting that sub-prime mortgage crisis may get bigger. Dow settled almost unchanged at 13,675.25, marginally lower by 0.98 points. The Nasdaq Composite Index, finished lower by 24.5 points at 2,774.76. S&P 500 slipped 3.71 points at 1,515.88.

As per provisional data, FIIs purchased shares worth a net Rs 1301.87 crore, while domestic institutional investors (DIIs) were net buyers of shares worth Rs 383.23 crore on Wednesday, 24 October 2007.

Crude oil traded higher in Asia today, 25 October 2007 on news US energy stockpiles fell sharply last week and tensions rose in the Middle East after Turkish warplanes bombed Kurdish rebel camps in Northern Iraq. New York's main futures contract, light sweet crude for delivery in December, advanced 85 cents to $87.95 a barrel. Brent North Sea crude for December climbed 73 cents to $85.10.

The BSE 30-share Sensex rose 20.07 points, or 0.11% to 18,512.91 on Wednesday, 24 October 2007. The Sensex is now 685.75 points away from its all-time high of 19,198.66 struck on 18 October 2007.

The broader based S&P CNX Nifty rose 22.45 points or 0.41% at 5,496.15, on Wednesday, 24 October 2007