Pre Session Commentary - Aug 13 2008

The Indian Market is expected to have negative opening on weak global cues as US markets closed on downbeat note and Asian markets are trading lower. On Tuesday, the Indian market closed with losses for the first time in six days on weak IIP data. Weak cues from European markets also dampened investor sentiment and pushed them to lighten their positions. The domestic market opened marginally higher tracking positive cues from the US markets and steep drop in crude oil. Market slipped soon after start to trade in negative territory and extend its losses on IIP numbers. Further it continued to lose ground till the end of session. Investors were also cautious on SEBI meet on participatory notes on 13th August 2008. NSE Nifty ended below 4,600 mark and BSE Sensex ended below 15,300 level. From the sectoral front, Metal and Bank stocks lost more than 3%. Followed by, Reality, IT, Capital Goods and Pharma stocks that also remained out of favor. However, FMCG and Oil & Gas stocks were able to gain favor from the market as most of the buying was seen from these baskets. The BSE Sensex closed lower by 291.79 points at 15,212.13 and NSE Nifty ended down by 68.25 points at 4,552.25. The BSE Mid Caps and Small Caps closed with losses of 47.15 points and 50.93 points at 5,935.53 and 7,220.42 respectively.

We expect that market may trade lower with negative bias during the trading session. Also, the SEBI meet today to review the regulatory framework governing P-notes will give further direction to the market.

June IIP numbers were down at 5.4% (YoY) as against 8.9% of the same period of previous year, but it was above the previous month''''s upwardly revised 4.1%. India''''s infrastructure sector output grew by 3.4% in June 2008 from a year earlier, slightly below 3.5% annual growth in May 2008.

NSE, on Tuesday received an in principle approval from the Securities and Exchange Board of India to initiate an exchange to trade foreign currency derivatives. NSE is planning to start a separate segment on its existing stock and derivatives bourse to trade in forex derivatives.

On Tuesday, the US market was closed lower despite further fall in crude oil prices as losses from JPMorgan Chase & Co raised more concerns about the financial sector. According to JPM, trading conditions have deteriorated, which causes losses of $1.5 billion. Light, sweet crude for September settlement dropped by $1.44 to close at $113.01 a barrel on the New York Mercantile Exchange, after touching the low of $112.31, a new three month low. Oil is now nearly $35 below its July 11 record high of $147.27.

The Dow Jones Industrial Average (DJIA) closed lower by 139.88 points at 11,642.47 along with S&P 500 index closed down by 15.73 points at 1,289.59 and NASDAQ closed at 2,430.61 lower by 9.34 points.

Indian ADRs ended down. In technology sector, Satyam ended lower by (4.46%) along with Infosys by (3.31%), Wipro by (3.17%) and Patni Computers dropped by (2.15%). In banking sector, ICICI bank and HDFC bank lost (8.24%) and (5.26%) respectively. In telecommunication sector, Tata Communication and MTNL ended down by (2.85%) and (0.95%). However, Sterlite industries increased by (2.56%).

Today the major stock markets in Asia are trading lower extending losses for second consecutive day on Wall Street''s fall overnight. Japan’s Nikkei is trading lower by 297.02 points at 13,006.58 along with Hang Seng index trading down by 199.76 points at 21,441.23, Singapore''s Straits Times slipped by 26.49 points at 2,790.33, Taiwan Weighted trading at 7,268.35 dropped by 25.45 points and Seoul Composite fell 17.08 points at 1,560.04.

The FIIs on Tuesday stood as net buyer in both equity and debt. The gross equity purchased was Rs2,958.10 Crore and the gross debt purchased was Rs359.30 Crore while the gross equity sold stood at Rs2,548.40 Crore and gross debt sold stood at Rs89.50 Crore. Therefore, the net investment of equity reported was Rs509.70 Crore and net debt was Rs269.80 Crore.

Due to sharp fall in domestic stock market, Indian rupee lost 21 paise at 42.37/38 against the US dollar. Indian currency opened lower at 42.24/26 a dollar against yesterday''s close of 42.16/17 and moved down further to close at 42.37/38 per dollar.

Today, Nifty has support at 4,412 and resistance at 4,608 and BSE Sensex has support at 14,726 and resistance at 15,492.