Market may drift lower

Volatility may grip the bourses ahead of expiry of September 2008 derivatives contracts. By Wednesday, 24 September 2008, roll over in Nifty stood at about 44% from September 2008 contracts to October 2008 contracts.

The government will today, 25 September 2008, release inflation data for 12 months to 13 September 2008, after market hours. Inflation based on the whole price index rose 12.14% in 12 months to 6 September 2008, marginally above previous week’s 12.10% rise.

The Dow and the S&P 500 edged lower on Wednesday, 24 September 2008, as uncertainty about when the US Congress might approve a proposed $700 billion financial sector bailout plan offset Warren Buffett's $5 billion bet on Goldman Sachs. The Nasdaq edged up, boosted by tech shares that rose on hopes an eventual bailout would increase tech spending. Dow shed 29 points or 0.27% to 10,825.17. The Nasdaq Composite index edged up 2.35 points or 0.11% at 2,155.68.

Asian stocks were mixed today, 25 September 2008. Key benchmark indices in Japan, South Korea, Singapore and Taiwan were down by between 0.4% to 1.07%. Key benchmark indices in Hong Kong and China were up by between 0.4% to 4.2%.

Back home, as per provisional data released by the stock exchanges, foreign funds sold shares worth a net Rs 494.40 crore on Wednesday, 24 September 2008. Domestic funds bought shares worth a net Rs 170.18 crore.

Foreign institutional investors (FIIs) have been pulling out their investments from India and other emerging markets to shore up resources to beat the global liquidity crunch. In India, FIIs sold shares worth a net Rs 7182.80 crore this month (till 23 September 2008). The outflow has reached Rs 35696.60 crore in calendar year 2008.

A deep financial crisis engulfed the global markets last week when the US investment banking giant Lehman Brothers filed for bankruptcy, Merrill Lynch was bought over by Bank of America in a distress sale and the world's largest insurer AIG had to seek US government help to thwart an imminent collapse. Early this week Goldman Sachs Group Inc and Morgan Stanley became bank holding companies after investors last week lost confidence in their freewheeling, high-risk broker model.

The Bush administration last week proposed a $700 billion financial rescue package, aimed at staving off the collapse of the US financial system.

Meanwhile, with Bush administration’s focus shifting to getting the US Congress nod for the financial sector bailout package, the Indo-US nuclear appears to have been sidelined. The deal needs to be ratified by the US Congress. On Tuesday, 23 September 2008, a key Senate Committee passed the deal with a landslide majority.