Pre Session Commentary - Aug 8 2008

The Indian Market is expected to have negative opening on weak global cues as US markets closed with losses and Asian markets are trading mixed along with rise in crude oil prices. On Thursday, the Indian market closed with marginal gains after showing volatility during the trading session. The domestic market opened marginally lower tracking negative cues from the Asian markets. Further, it showed some recovery but lost the momentum and turned volatile to close with minor gains ahead of inflation worries. NSE Nifty ended above 4,500 mark and BSE Sensex ended above 15,100 level. From the sectoral front, Consumer Durables and Auto stocks overtake the market followed by Bank, IT and Reality stocks as witnessed significant buying from these baskets. However, only Capital Goods, Oil & Gas and Power stocks were sufferers of investor’s negative attitude. The BSE Sensex closed higher by 43.71 points at 15,117.25 and NSE Nifty ended marginally up by 6.30 points at 4,523.85. We expect that market may remain volatile during the trading session.

India''s annual inflation increased to more than 12% for the first time in over 13 years, which added fuel to expectations of further monetary tightening to tame prices. Inflation edged higher to 12.01% for the week ended 26th July 2008, up from 11.98% for the previous. This increase is due to the prices of pulses, spices, eggs, fish and meat among other things continued to rise.

The Bank of England kept unchanged the British interest rates at 5.0% for the fourth month in a row. Along with this the European Central Bank that left its benchmark interest rate unchanged at 4.25% on Thursday while acknowledged that the economy was struggling because of high energy prices and slower growth.

Czech Republic''s central bank unexpectedly cut its benchmark interest rate by 25 basis points to 3.5%. Most analysts had expected the central bank to keep rates unchanged. This is in response to easing inflationary pressures and an attempt to prevent further appreciation of the Czech koruna and is the first reduction for more than three years.

On Thursday, the US market was closed in deep red due to a rise in unemployment and poor retail figures. The number of first time claims filed in the week ending 2nd August 2008, rose by 7,000 to 455,000, the highest level since March 2002. Along with this results from US retailers including Wal-Mart have shown disappointing sales for July. Increase in crude oil price above $120 a barrel also added to the negative sentiment. Light, sweet crude for September delivery rose $1.56 to settle at $120.02 a barrel on the New York Mercantile Exchange.

The Dow Jones Industrial Average (DJIA) closed lower by 224.64 points at 11,431.43 along with S&P 500 index closed down by 23.12 points at 1,266.07 and NASDAQ closed at 2,355.73 down by 22.64 points.

Indian ADRs ended mixed. In technology sector, Patni Computers ended higher by (0.72%) along with Satyam by (0.13%) while Wipro dropped by (2.80%) followed by Infosys by (0.2.36%). In banking sector, ICICI bank and HDFC bank lost (4.12%) and (1.70%) respectively. In telecommunication sector, Tata Communication and MTNL ended up by (2.73%) and (0.78%). Sterlite industries increased by (3.10%).

Today the major stock markets in Asia are trading mixed. Taiwan Weighted is trading higher by 106.04 points at 7,130.62 along with Hang Seng index trading up by 7.95 points at 22,112.15 while Japan’s Nikkei is trading down by 74.03 points at 13,050.96 and Singapore''s Straits Times lost 17.81 points at 2,816.90.

The FIIs on Thursday stood as net buyer in both equity and debt. The gross equity purchased was Rs4,921.90 Crore and the gross debt purchased was Rs104.40 Crore while the gross equity sold stood at Rs3,293.30 Crore and gross debt sold stood at Rs91.90 Crore. Therefore, the net investment of equity reported was Rs1,628.60 Crore and net debt was Rs12.50 Crore.

The Indian rupee ended steady on Thursday. The partially convertible rupee ended at 42.075/080 per dollar, off a high of 41.87 and little changed from its previous close of 42.08/09.

Today, Nifty has support at 4,422 and resistance at 4,593 and BSE Sensex has support at 14,737 and resistance at 15,401.