Pre Session Commentary - July 10 2008

The Indian Market is expected to have negative opening on the back of weak global cues as US market closed in deep red and Asian market is trading weak. The Indian market on Wednesday closed with heavy gains. The domestic market had a strong opening tracking favorable global cues from Fed Chairman Ben Bernanke’s encouraging statement that central bank may extend its emergency-loan program for investment banks into next year and drop in crude oil prices. Market continued to trade in extremely positive zone throughout the trading session to close with handsome gains. From the sectoral front, all indices closed in green and Capital Goods, Metal, Oil & Gas, Reality and Bank stocks were in limelight as strong buying witnessed in these baskets. Reality index closed with gain of more than 6%. Among the Sensex 30 pack, all indices closed in green. The BSE Sensex closed higher by 614.61 points at 13,964.26 and NSE Nifty ended up by 168.55 points at 4,157.10. We expect that market may decline during the trading session.

On Wednesday, the US market was closed in red due to investor’s worries about the soundness of the financial sector that led to a late selloff, which results sharp drop in financials. Among the financials Bank of America, American Express and Citigroup led the decline. Crude oil prices raised $1.86 to $137.90 a barrel also adds on to the negative sentiment.

Investors were worried due to mortgage finance companies which may have to sell more shares than expected to compensate for losses from the housing fall. Prepayments on U.S. mortgage backed securities decreased in June from May levels as home loan refinancing activity is also reduced. Overall fixed-rate agency prepayment speeds fell 13% in June, with the paydowns 11% lower at $41 billion. The decrease in prepayment speeds in June followed a drop in May. Overall fixed-rate agency prepayment speeds fell 20% in May.

The Dow Jones Industrial Average (DJIA) closed lower by 236.77 points at 11,147.44 along with NASDAQ ended down by 59.55 points at 2,234.89 while S&P 500 index closed lower by 29.01 points at 1,244.69.

Indian ADRs ended mixed. In technology sector, Wipro ended up by (2.25%) along with Infosys by (1.91%) while Patni Computers dropped by (1.58%) and Satyam by (1.03%). In banking sector, ICICI bank and HDFC bank lost (1.76%) and (1.60%) respectively. In telecommunication sector, Tata Communication and MTNL ended down by (1.73% and (0.46%)). Sterlite industries inclined (1.35%).

Today the major stock markets in Asia are trading in red. Hang Seng index is trading lower by 264.55 points at 21,541.26 along with Taiwan Weighted trading down by 48.24 points at 7000.01 and Japan’s Nikkei trading at 13,039.49 lost 12.64 points.

The FIIs on Wednesday stood as net buyer in equity. The gross equity purchased was Rs2,333.80 Crore and the gross debt purchased was Rs0.00 Crore while the gross equity sold stood at Rs2,165.30 Crore and gross debt sold stood at Rs0.00 Crore. Therefore, the net investment of equity reported was Rs168.50 Crore and net debt was 0.00 Crore.

Today, Nifty has support at 4,035 and resistance at 4,255 and BSE Sensex has support at 13462 and resistance at 14,220.