Market seen under pressure on surge in inflation, crude rally

Local benchmark indices are headed for a weak start today, 22 August 2008 weighed by fears of further monetary tightening by the Reserve Bank of India after inflation hit a fresh 16-year high. A rally in crude oil prices may weigh on the sentiment further. Global cues were mixed.

Inflation data, announced after market hours yesterday, 21 August 2008, showed wholesale prices index rose 12.63% in the week ended 9 August 2008, up from the previous week's 12.44%.

Light, sweet crude for September delivery surged $5.62 to $121.18 a barrel yesterday, 21 August 2008 on the New York Mercantile Exchange (NYMEX) on weaker US dollar and worries about tightening output from OPEC countries.

Asian markets slipped to a two-year low today, 22 August 2008. China's Shanghai Composite slipped 1.37% or 33.31 points at 2,398.39, Japan's Nikkei was down 0.67% or 85.50 points at 12,666.71, Taiwan's Taiwan Weighted fell 0.86% or 59.33 points at 6,859.15, and South Korea's Seoul Composite plunged 2.19% or 33.16 points at 1,479.43.

US stocks finished mixed on Thursday, 21 August 2008, after investors largely shrugged off a jump in oil prices and focused instead on a bullish call on Lehman Brothers Holdings that eased worries about the financial sector. The Dow Jones industrial average gained 12.78 points, or 0.11%, to 11,430.21. The S&P 500 index advanced 3.18 points, or 0.25%, to 1,277.72, and the Nasdaq Composite index slipped 8.70 points, or 0.36%, to 2,380.38.

Back home, the BSE 30-share Sensex lost 434.50 points or 2.96% to 14,243.73 and the S&P CNX Nifty fell 131.90 points or 2.99% to 4,283.85, yesterday 21 August 2008.

The barometer index is down 6,043.26 points or 29.78% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 6,963.04 points or 32.83% away from its all-time high of 21,206.77 struck on 10 January 2008.

Foreign institutional investors (FIIs) were net equity sellers worth Rs 545.71 crore while mutual funds purchased shares worth Rs 344.89 crore on Thursday, 21 August 2008, according to provisional data on NSE.

FIIs were net buyers of Rs 561.73 crore in the futures & options segment on Thursday, 21 August 2008. They were net buyers of index futures to the tune of Rs 1176.72 crore and purchased index options worth Rs 631.35 crore. They were net sellers of stock futures to the tune of Rs 9.37 crore and bought stock options worth Rs 6.99 crore.