Pre Session Commentary - July 29 2008

The Indian Market is expected to have negative opening due to weak global cues as US markets closed in deep red and Asian markets are trading lower. RBI’s quarterly review today also adds to the investors’ negative sentiment. Monday, the Indian market closed with gains after showing volatility during the trading session. The domestic market opened flat but soon turned volatile led by discomfort due to the serial blasts in Bangalore and Ahmedabad. Further it was not able to gain the momentum and was skipping up and down. At the end, market managed to close in green due to some buying in key indices. The BSE Sensex ended below 14,400 mark and NSE Nifty closed below 4,400 level. BSE Small Cap index gained around 2%. From the sectoral front, the Capital Goods, Oil & Gas, Reality, Consumer Durables and Pharma stocks were in favor as most of the buying was seen from these baskets. While the Metal, Power, IT and Auto stocks remained sufferer of negative sentiment. The BSE Sensex closed higher by 74.17 points at 14,349.11 and NSE Nifty ended up by 20.25 points at 4,332.10. We expect that market may trade lower during the trading session.

The Reserve Bank of India will release its quarterly review today and may take some measures to curb higher inflation. It has released its Macro Economic review, as it always does a day before the credit policy. According to this review broad money growth YoY was at 20.5 % as on 4th July 2008 as against 21.8% a year ago. The bank deposits YoY grew by 20.7 % as against 23.1 %. Along with this GDP growth according to the revised estimate of CSO (Central Statistical Organization) is 9 % for the year ended 2007-08 in comparison to 9.6 % in 2006-07. The review also pointed out that India''s budget deficit may come under pressure in 2008-09 as the government’ spending is increasing. According to this report inflation is global phenomenon and is high in major economies due to the impact of high food and fuel prices and strong demand conditions.

On Monday, the US market was closed in deep red due to shut down of two more banks by regulators. Federal regulators announced that First Heritage Bank of Newport Beach, California and First National Bank of Nevada, based in Reno would close, because both were undercapitalized. Crude oil also bounced back to put pressure after three straight weeks of decline. Crude for September delivery raised $1.47 to settle at $124.73 a barrel on the New York Mercantile Exchange.

The Dow Jones Industrial Average (DJIA) closed lower by 239.61 points at 11,131.08 along with NASDAQ ended down by 46.31 points at 2,264.22 and S&P 500 index closed lower by 23.39 points at 1,234.37.

Indian ADRs ended down. In technology sector, Satyam ended lower by (2.70%) along with Wipro by (2.19%), Infosys by (1.31%) and Patni Computers dropped by (1.10%). In banking sector, ICICI bank and HDFC bank lost (8.45%) and (3.12%) respectively. In telecommunication sector, Tata Communication and MTNL ended down by (9.34%) and (2.48%). However, Sterlite industries increased by (1.85%).

Today the major stock markets in Asia are trading lower US market losses overnight on fresh worries over fallout from the credit crisis. Hang Seng index is trading down by 582.88 points at 22,104.33 along with Japan’s Nikkei trading lower by 287.34 points at 13,066.44. Taiwan Weighted is trading at 6,961.83 down by 271.79 points.

The FIIs on Monday stood as net seller in equity and debt. The gross equity purchased was Rs2,954.60 Crore and the gross debt purchased was Rs207.00 Crore while the gross equity sold stood at Rs3,501.00 Crore and gross debt sold stood at Rs324.40 Crore. Therefore, the net investment of equity reported was (Rs546.30) Crore and net debt was (Rs117.40) Crore.

Today, Nifty has support at 4,153 and resistance at 4,400 and BSE Sensex has support at 13,809 and resistance at 14,626.