Market may come under pressure

The market may come under pressure tracking weak global cues. In an important event, after Indian market hours yesterday, 11 December 2007, the US Federal Reserve lowered its benchmark interest rate by a quarter point to 4.25%, while signaling that it is open to further cuts if the housing slump and credit squeeze worsens.

The Central Bank also cut the discount rate by a quarter point to 4.75%, counter to speculation among investors that the Fed would make a deeper reduction.

Policy makers are actively considering steps to ease credit in financial markets, and haven't ruled out moves to increase liquidity before their next scheduled meeting on 29 January 2007.

Bck home, the Index of Industrial Production (IIP) data for October 2007 is due today, 12 November 2007. IIP had slumped 6.4% in September 2007 over 12% in September 2006. Industrial output moved down 9.2% in April-September 2007 compared with 11.1% in April-September 2006.

Asian markets were trading weak today, 12 December 2007. Hong Kong's Hang Seng (down 2.64% at 28,454.28), Japan's Nikkei (down 1.84% at 15,749.87), Taiwan's Taiwan Weighted (down 2.09% points at 8,457.55), Straits Times (down 1.77% at 3,525.42), South Korea's Seoul Composite (down 1.46% 1,897.06) and Shanghai Composite (down 2.03% to 5,069.87), all edged lower.

US markets tumbled after the Fed cut rates by a quarter point disappointing traders expecting double that amount. The Fed's statement said that elevated energy and commodity prices may put upward pressure on inflation. The central bank lowered the federal funds rate by a quarter-point to 4.25%. The Fed also lowered its discount rate, the interest it charges on direct loans it makes to banks, by a quarter-point to 4.75%.

The Dow Jones Industrial Average slumped 294.26 points, or 2.14%, to 13,432.77. The Standard & Poor's 500 index plunged 38.31 points, or 2.53%, to 1,477.65, and the Nasdaq Composite index declined 66.60 points, or 2.45%, to 2,652.35

Back home, the 30-share BSE Sensex jumped 360.21 points or 1.81% to 20,290.89, a record closing high, on Tuesday, 11 December 2007. It hit an all-time high of 20,333.06 in late trade. The broader S&P CNX Nifty jumped 136.65 points or 2.29% at 6,097.25, a record closing high. Nifty hit all-time high of 6,111.20 during the day.

Crude oil fell in New York on concern a quarter-point interest rate cut by the U.S. Federal Reserve may not be enough to stem an economic slowdown in the world's largest energy consumer. Crude oil for January delivery fell as much as 72 cents, or 0.8%, to $89.30 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude oil for January settlement fell 40 cents, or 0.4%, to $89.59 a barrel on the London-based ICE Futures Europe exchange.

As per provisional data, foreign institutional investors (FIIs) bought shares worth a net Rs 387.27 crore, while domestic institutional investors (DIIs) were net buyers of shares worth Rs 341.31 crore on Monday, 10 December 2007.

FIIs were net buyers to the tune of Rs 1,038.16 crore in the futures & options segment on Tuesday 11 December 2007. They were net buyers of index futures to the tune of Rs 1,037.42 crore and they bought index options worth Rs 190.62 crore. They were net sellers of stock futures to the tune of Rs 179.26 crore and sold stock options worth Rs 10.62 crore.