Pre Session Commentary - July 16 2008

The Indian Market is expected to have negative opening on the back of unfavorable global cues as US market closed mixed and Asian markets are trading in red. On Tuesday, the Indian market closed with huge losses as heavy selling was evident across all sectors under the combined weight of weak global markets and domestic political uncertainties. The domestic market yesterday opened on back foot, tracking weak cues from the global market along with domestic political and inflation worries. Further, market traded completely on the negative territory without showing any sign of recovery and landed in extremely negative territory. The BSE Sensex closed at 15 months low that below 12,700 level and NSE Nifty below 3,900. From the sectoral front, Bank index were completely crushed to close with deep cut of more than 7% as most selling was reported from this basket. Followed this Capital Goods, Metal and Reality stocks also closed with cut of more than 5%. The BSE Sensex closed lower by 654.32 points at 12,676.19 and NSE Nifty ended down by 178.60 points at 3,861.10. We expect that market may lose some grounds during the trading session.

Selling pressure gathered momentum after reports of international rating agency Fitch downgrading the country''s debt outlook and currency. Negative sentiment on the market was also added by the international rating agency Standard & Poor’s (S&P) raising concerns over India’s sovereign ratings outlook, and revision by global agency, Fitch, on India’s domestic credit outlook to negative. The agency expects fiscal deficit on account of bond issuances to oil and fertiliser companies to account for least 2% of GDP this year, indicating an implicit deficit of 6.5% of GDP.

On Tuesday, the US market was closed mixed as oil dropped by almost $7 a barrel, giving investors hope that lower energy prices could help revive the flagging economy. Oil price dropped $6.44 to settle at $138.74 on the New York Mercantile Exchange.

The NASDAQ ended marginally higher by 2.84 points at 2215.71, while the Dow Jones Industrial Average (DJIA) closed lower by 92.65 points at 10,962.54 along with S&P 500 ended down by 13.39 points at 1,214.91.

Indian ADRs ended down. In technology sector, Patni Computers ended up by (3.35%) while Satyam closed down by (5.28%), Wipro by (1.59%) and Infosys dropped by (0.35%). In banking sector, ICICI bank and HDFC bank lost (7.11%) and (4.23%) respectively. In telecommunication sector, Tata Communication ended up by (1.50%) and MTNL ended down by (0.23%). Sterlite industries decreased by (4.20%).

Today the major stock markets in Asia are trading in red on worries for US financial health. Japan’s Nikkei is trading lower by 73.39 points at 12,681.17 along with Hang Seng index trading down by 69.62 points at 21,105.15 and Taiwan Weighted trading at 6,788.75 dropped by 45.49 points.

The FIIs on Tuesday stood as net seller in equity. The gross equity purchased was Rs2,020.10 Crore and the gross debt purchased was Rs0.00 Crore while the gross equity sold stood at Rs2,232.30 Crore and gross debt sold stood at Rs0.00 Crore. Therefore, the net investment of equity reported was (Rs212.30) Crore and net debt was Rs0.00 Crore.

Today, Nifty has support at 3,773 and resistance at 3,928 and BSE Sensex has support at 12,358 and resistance at 12,940.