Pre Session Commentary - Aug 26 2008

The Indian Market is expected to have negative opening as the US market closed in red and Asian markets are trading lower. On Monday, domestic market trimmed its earlier gains and ended sharply lower from the days’ high due to the profit booking at higher levels. Market opened higher tracking favorable cues from global markets and sharp drop in crude oil prices. Further market turned unstable and started its downward journey since afternoon. Domestic market continued to lose ground till the end of session but managed to conclude the day marginally up. NSE Nifty ended above 4,300 mark and BSE Sensex crossed 14,400 level. From the sectoral front, buying was seen in Bank, Reality, Auto and IT stocks. However, Metal, Power, Capital Goods and Oil & Gas stocks remained out of favor as most of the selling was seen from these baskets. The BSE Sensex closed higher by 48.86 points at 14,450.35 and NSE Nifty ended marginally up by 7.90 points at 4,335.35. The BSE Mid Caps closed with gains of 14.36 points at 5,741.21 while Small Caps ended down by 3.60 points at 6,922.25. We expect that market may decline during the trading session.

On Monday, the US market was closed lower on negative news about financial sector. Dow registered its largest fall in about one month. Investors waited for some resolution on problems faced by Fannie Mae, Freddie Mac and Lehman Brothers following rampant speculation last week. Negative sentiment was also fueled by South Korean regulators’ instruction to Korean Development Bank to take a cautious approach before making an acquisition of an overseas bank. The bank had expressed interest in Lehman Brothers.

The Dow Jones Industrial Average (DJIA) closed lower by 241.81 points to close at 11,386.25. The NASDAQ index decreased by 49.12 points to close at 2,365.59 and the S&P 500 (SPX) gained 25.36 points to close at 1,266.84.

Indian ADRs ended weak. In technology sector, Infosys ended lower by (3.99%) followed by Patni Computers dropped by (3.12%), Wipro by (3.01%) and Satyam by (1.79%). In banking sector HDFC bank and ICICI Bank lost (2.41%) and (0.80%). In telecommunication sector, Tata Communication ended down by (5.11%) while MTNL ended up by (0.83%). Sterlite industries decreased by (3.40%).

Today the major stock markets in Asia are trading lower after Wall Street drop. Japan’s Nikkei is trading lower by 169.14 points at 12,709.52 along with Hang Seng index trading down by 147.18 points at 20,957.61, Taiwan Weighted trading 6.969.44 gained by 61.28 points and Singapore''s Straits Times is plunged 31.03 points at 2,702.42.

The FIIs on Monday stood as net seller in equity and in debt. The gross equity purchased was Rs1,689.70 Crore and the gross debt purchased was Rs77.40 Crore while the gross equity sold stood at Rs1,803.50 Crore and gross debt sold stood at Rs123.20 Crore. Therefore, the net investment of equity reported was (Rs113.80) Crore and net debt was (Rs45.80) Crore.

Indian Rupee fell sharply by 36 paise to close at 43.78/79 from Friday''s level of 43.42/43 against the dollar on sustained capital outflows amid strong dollar overseas. Strong sell off in the equities after a firm start also added to the downward movement.

Today, Nifty has support at 4,213 and resistance at 4,394 and BSE Sensex has support at 13,954 and resistance at 14,682.