Local indices geared for rally in opening trade

Key benchmark indices are likely to snap their four-day loosing streak mirroring strong global markets. Sentiment may also get a boost from sharp plunge in crude oil for the second straight day yesterday, 16 July 2008.

On the New York Mercantile Exchange, August crude was down $4.14 at $134.60 a barrel yesterday, 16 July 2008.

However caution may prevail ahead of the release of inflation figures after market hours today, 17 July 2008. From this week inflation data will be released every Thursday at 17:00 IST instead of mid-day on Friday.

The Reserve Bank of India (RBI) may reportedly opt for further tightening of money supply as there is no likelihood of inflation coming down to single digit figure in the next six months based on indications given by the central bank Governor to a parliamentary panel. Some more monetary measures may be taken to contain the aggregate demand to counter inflation, RBI Governor Dr YV Reddy told members of the Parliamentary Standing Committee attached to the finance ministry earlier this week.

Asian markets were trading higher today, 17 July 2008. China's Shanghai Composite rose 2.24% or 60.60 points at 2,766.46, Nikkei gained 1.11% or 141.59 points at 12,902.39, Hang Seng surged 2.65% or 562.15 points at 21,785.65, Taiwan's Taiwan Weighted added 3.24% or 217.16 points at 6,927.80, Straits Times advanced 1.88% or 53.41 points at 2,888.73 and South Korea's Seoul Composite was up 1.90% or 28.63 points at 1,536.03

US markets surged yesterday, 16 July 2008 led by financial stocks, after unexpectedly strong results from Wells Fargo & Co, the fifth-largest US bank and mortgage lender, eased worries about the on-going credit crisis. A drop in oil prices also aided the upmove.

The Dow Jones industrial average soared 276.74 points, or 2.52%, to 11,239.28. The S&P 500 index rose 30.45 points, or 2.51%, to 1,245.36, and the Nasdaq Composite index advanced 69.14 points, or 3.12%, to 2,284.85.

Back home, the key benchmark indices suffered losses for the fourth straight day yesterday, 16 July 2008, on unabated selling pressure in blue-chip stocks. Both the indices hit 15-month low in intra-day trade yesterday. The 30-share BSE Sensex was down 100.39 points or 0.79% to 12,575.80 and the broader based S&P CNX Nifty was down 44.4 points or 1.15% at 3816.70 yesterday.

The BSE Sensex is down sharply 7711.19 points or 38.01% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 8630.97 points or 40.69% away from its all-time high of 21,206.77 struck on 10 January 2008.

As per provisional data, foreign funds sold shares worth a net Rs 229 crore while domestic funds bought shares worth a net Rs 14.12 crore yesterday, 16 July 2008.

Foreign institutional investors (FIIs) were net sellers of Rs 712.30 crore in the futures & options segment on 16 July 2008. They were net sellers of index futures to the tune of Rs 69.76 crore and sold index options worth Rs 432.98 crore. They were net sellers of stock futures to the tune of Rs 213.45 crore and purchased stock options worth Rs 3.90 crore.

Political uncertainty will also continue to take its toll on the market. The government is holding a two-day special session of parliament on 21 July 2008 and 22 July 2008 to seek vote of confidence after it was reduced to minority following withdrawal of support by Left parties on 8 July 2008. The government hopes to retain power due to backing from Samajwadi Party, a regional party in Uttar Pradesh.