Pre Session Commentary - Sep 18 2008

The Indian Market is expected to have gap down opening as US markets closed in deep red and Asian markets are trading weak along with surge in crude oil. On Wednesday, Indian markets remained edgy for the whole day and closed in negative territory after giving up its initial gains. Rise in crude oil along with lower Asian markets, fueled the negative sentiments. Crude oil for October delivery raised $3.57, to $94.72 a barrel on the New York Mercantile Exchange. Domestic markets opened on upbeat note tracking positive cues from the global markets as AIG rescued by Fed and Barclays buys Lehman U.S. unit. Market was not able to sustain the initial momentum and slipped soon after start. Further markets continued to extend its losses though struggled to recover after mid session but slipped again. Finally, markets closed with losses on sustained selling pressure. From the sectoral front, Reality stocks remained in bear’s grip as lost more than 4% and closed in red along with all other indices. Selling pressure over the market was contributed mainly by the Bank, Metal, Oil & Gas, Capital Goods and Pharma stocks. Mid cap and Small cap stocks also remained out of favor as lost more than 1%.

The BSE Sensex closed lower by 255.90 points at 13,262.90 and NSE Nifty ended down by 66.65 points at 4,074.90. The BSE Mid Caps and Small Caps closed with losses of 77.62 points at 5,139.63 and by 74.66 points at 6,214.75. We expect that market may fall further during the trading session and a major concern for the market will be the liquidity concerns in the global markets. Also, the inflation data for the week ended 6th September 2008, due to be released today evening after market hours will give further directions to the market.

On Wednesday, the US market closed in deep red. In a bid to protect investors from so-called "naked" short selling of securities, the Securities and Exchange Commission is requiring short sellers and their broker dealers to deliver securities by the close of business on the settlement date, starting Thursday. The new SEC rules adopted Wednesday remove an exception for market makers in options on stocks from rules restricting naked short-selling and tighten anti-fraud regulations related to that activity. Fed’s bail out of AIG for $85 billion and Barclay’s plan to buy Lehman units fails to stem the fall in financial stocks. Some of the biggest losers include Boeing, JP Morgan, American Express and Walmart. Crude oil for October delivery raised $6.01, to settle at $97.16 a barrel on the New York Mercantile Exchange.

The Dow Jones Industrial Average (DJIA) closed lower by 449.36 points to close at 10,609.66 followed by the NASDAQ index ended down by 109.05 points at 2,098.85 and the S&P 500 (SPX) lost 57.21 points to close at 1,156.39.

Indian ADRs ended down. In technology sector, Satyam ended lower by (6.59%) followed by Infosys dropped by (5.63%), Wipro lost (5.34%) and Patni Computers fell (2.35%). In banking sector ICICI Bank and HDFC Bank plunged (7.66%) and (5.27%). In telecommunication sector, MTNL and Tata Communication plunged (5.94%) and (2.81%). Sterlite industries decreased by (10.83%).

Today the major stock markets in Asia are trading lower on Wall Street losses over night. Hang Seng index is trading down by 717.51 points at 16,919.68 along with Japan’s Nikkei lower by 374.22 points at 11,375.57, Taiwan Weighted lost 215.20 points at 5,585.67 and Singapore''s Straits fell 82.86 points at 2,336.43.

The FIIs on Wednesday stood as net seller in equity and net buyer in debt. Gross equity purchased stood at Rs3,092.40 Crore and gross debt purchased stood at Rs9,047.90 Crore while the gross equity sold stood at Rs4,333.00 Crore and gross debt sold stood at Rs144.00Crore. Therefore, the net investment of equity reported was (Rs1,240.60) Crore and net debt was Rs8,904.00 Crore.

On Wednesday India''s rupee rebounded from a two year low, after the central bank announced measures to boost dollar supply and curb exchange rate swings. The rupee rose 1.2% to close at 46.34/35 per dollar against Tuesday’s close of 46.89/90 and touched a high of 46.26 and a low of 46.72.

Today, Nifty has support at 3,867 and resistance at 4,126 and BSE Sensex has support at 12,714 and resistance at 13,528.