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Wednesday, September 17, 2008

Pre Session Commentary - Sep 17 2008


The Indian Market is expected to have positive opening as US markets closed in green on the back of AIG’s rescue by Fed and Barclays buys Lehman U.S. unit and Asian markets are trading higher along with drop in crude to $91.15 a barrel. On Tuesday, Indian markets staged a smart recovery from its earlier plunge, in the second half of the trading session to end with flat note. Markets wiped out most of its losses on short covering along with drop in black gold below $ 92 a barrel and expected cut in Fed rate in the meeting of Federal Reserve on 16th September 2008 to protect weak US financial sector. Domestic markets opened on weak note tracking extremely negative cues from the global markets as Lehman Brothers had filed for bankruptcy protection in US. Further, markets continued its northward journey without any sign of recovery. However, some bouts of buying during last trading hours in beaten down stocks lifted the markets towards dotted line and finally ended flat. From the sectoral front, Oil & Gas and Bank counters led the recovery towards end of session. However, Metal, Reality, Consumer Durables and Pharma stocks remained out of favor as witnesses most of the selling from these baskets. Mid cap and Small cap stocks also remained unfavorable as lost more than 1%. The BSE Sensex closed lower by 12.47 points at 13,518.80, while NSE Nifty ended up by 2.00 points at 4,074.90. The BSE Mid Caps and Small Caps closed with losses of 71.34 points at 5,217.25 and by 91.06 points at 6,289.41. We expect that market may break its losing trend to gain some ground during the trading session.

RBI to ease pressure on markets has hiked the maximum interest that banks can pay on NRI deposits by 50 basis points for dollar as well as rupee deposits. The cap on NRE deposits has been raised to LIBOR plus 50 bps while that on FCNR (B) deposits is 25 bps minus LIBOR. Further, Central bank has also decided to allow banks to borrow additional 1% of NTDL or net demand and time liabilities from the repo window.

US Federal Reserve on Tuesday held short-term interest rates steady at 2%, which was expected to cut to ease growing fears about the health of the US economy. The increased possibility of a Fed rate cut to strengthen the shaken financial system helped hold up stocks prior to the meeting.

On Tuesday, the US market closed in green as AIG rescued by Fed and Barclays buys Lehman U.S. unit. US government is agreed to lend up to $85 billion emergency loan to AIG for two years in exchange for a 79.9% equity stake. Crude Oil for October delivery fell $4.56 to settle at $91.15 a barrel on the New York Mercantile Exchange, after earlier touching to low of $90.51, its lowest level since February 8.

The Dow Jones Industrial Average (DJIA) closed higher by 141.51 points to close at 11,059.02 followed by the NASDAQ index ended up by 27.99 points at 2,207.90 and the S&P 500 (SPX) gained 20.90 points to close at 1,213.60.

Indian ADRs ended mixed. In technology sector, Infosys ended higher by (4.60%) followed by Wipro advanced by (1.71%) and Satyam gained (0.83%), while Patni Computers lost (3.23%). In banking sector ICICI Bank lost (3.49%), while HDFC Bank gained (3.73%). In telecommunication sector, Tata Communication gained (11.59%), while MTNL plunged (1.70%). However, Sterlite industries increased by (0.30%).

Today the major stock markets in Asia higher on Wall Street rebound. Hang Seng index is trading up by 282.87 points at 18,583.48 along with Japan’s Nikkei higher by 241.06 points at 11,850.78 and Taiwan Weighted gained 120.59 points at 5,877.18, while Singapore''s Straits is down by 22.88 points at 2,463.67.

The FIIs on Tuesday stood as net seller in equity and net buyer in debt. Gross equity purchased stood at Rs2,495.20 Crore and gross debt purchased stood at Rs607.30 Crore while the gross equity sold stood at Rs3,124.50 Crore and gross debt sold stood at Rs311.30Crore. Therefore, the net investment of equity reported was (Rs629.30) Crore and net debt was Rs296.00 Crore.

On Tuesday Indian rupee reported its biggest single day fall in a decade. The partially convertible rupee ended at 46.89/90 per dollar from its close of 46.04/05 on Monday, off a low of 46.99 which was its lowest since July 24, 2006.

Today, Nifty has support at 4,018 and resistance at 4,187 and BSE Sensex has support at 13,255 and resistance at 13,958.