Pre Session Commentary - Aug 22 2008

The Indian Market is expected to have negative opening as the Asian markets are trading lower and crude oil jumped further. On Thursday, the market reported sharp drop to close in deep red due to huge selling in financial and realty stocks. The domestic market opened on downbeat note tracking unfavorable cues from the Asian markets and further rise in crude oil. Further market continued to extend its losses ahead of inflation number for the week ended 9th August 2008. Heavy selling during final trading hours forced market to end in sharp negative terrain. Weak European markets also hit the investor’s sentiment NSE Nifty ended below 4,300 mark and BSE Sensex below 14,300 level. From the sectoral front, Bank and Reality stocks closed with deep cut of more than 5%. Along with that, Capital Goods, Metal, Oil & Gas, Power, IT and Pharma stocks also remained out of favour as witnessed most of the selling pressure. BSE Midcap and Smallcap stocks lost more than 2% and 1.5% respectively. The BSE Sensex closed lower by 434.50 points at 14,243.73 and NSE Nifty ended down by 131.90 points at 4,283.85. The BSE Mid Caps closed with losses of 118.91 points at 5,707.46 and Small Cap ended lower by 129.21 points 6,937.02. We expect that market may remain bearish during the trading session as the rising inflation may remain a concern for the investors for taking fresh positions.

Inflation for the week ended 9th august 2008, stood at 12.63% from 12.44% of previous week. Inflation was 4.24% during the corresponding week last year. This rise, which is 16 year high is mainly due to increase in prices of food items like fruits, vegetables and milk. Price of cotton yarn was up by eight% during the week and polyester became dearer by seven%.

On Thursday, the US market was closed mixed, on three major factors like rise in crude oil, about a government bailout of Fannie Mae and Freddie Mac, and a possible takeover of Lehman Brothers. On the New York Mercantile Exchange, oil raised $5.96 to $121.61 per barrel.

The Dow Jones Industrial Average (DJIA) closed higher by 12.78 points to close at 11,430.21. The S&P 500 (SPX) increased by 3.18 points to close at 1,277.72 while the NASDAQ index lost 8.70 points to close at 2,380.38.

Indian ADRs ended lower. In technology sector, Wipro ended lower by (3.14%) followed by Satyam dropped by (1.10%), Infosys by (0.91%) and Patni Computers by (0.19%). In banking sector ICICI bank and HDFC Bank lost (4.47%) and (2.95%). In telecommunication sector, MTVL advanced by (2.59%) while Tata Communication dropped by (2.93%). However, Sterlite industries increased by (1.36%).

Today the major stock markets in Asia are trading weak. Japan’s Nikkei is trading lower by 85.50 points at 12,666.71 along with Taiwan Weighted trading down by 59.93 points at 6,859.15, Seoul Composite trading 1,479.43 dropped by 33.16 points and Singapore''s Straits Times is flat at 2,713.25.

The FIIs on Thursday stood as net seller in equity and net buyer in debt. The gross equity purchased was Rs1,802.40 Crore and the gross debt purchased was Rs658.40 Crore while the gross equity sold stood at Rs2,087.80 Crore and gross debt sold stood at Rs267.90 Crore. Therefore, the net investment of equity reported was (Rs285.40) Crore and net debt was Rs390.50 Crore.

The rupee advanced by around 20 paise against the dollar breaking the week-long losing streak. The domestic currency opened at 43.73/74 and weakened to reach an intra-day low 43.77/78. It recovered to close at 42.51/52, against the previous close of 43.70/72

Today, Nifty has support at 4,187 and resistance at 4,329 and BSE Sensex has support at 13,872 and resistance at 14,373.