Pre Session Commentary - Sep 19 2008

The Indian Market is expected to have positive opening as US markets closed in green and Asian markets are trading higher. On Thursday, Indian markets broke its seven days losing streak to recover smartly from the dip fall and close in green terrain. Markets bounced back on Finance Minister’s statement about India’s financial health. Recovery in Asian markets also lifted up the sentiments as china relaxed policies for second time in the week and Japan, Australia and India, pumped $28 billion money into the markets. Domestic markets opened on down beat note and crashed since initial bell on weak global cues. Further markets continued to lose ground on another bloody day. Markets took U turn after mid session and recovered to end with gains. From the sectoral front, Oil & Gas, Bank, Capital Goods, and Auto stocks were leaders of the day as witnessed most of the buying from these baskets. However, Reality, Consumer Durables, Metal and IT stocks remained out of favor. Mid cap and Small cap stocks were also losers as lost more than 1% and 2% respectively.

The BSE Sensex ended higher by 52.70 points at 13,315.60 and NSE Nifty ended up by 29.90 points at 4,038.15. However, the BSE Mid Caps and Small Caps closed with losses of 60.50 points at 5,079.13 and by 139.32 points at 6,075.43. We expect that market may gain some ground during the trading session.

Inflation rose marginally to 12.14% for 6th September 2008, as against 12.1% recorded a week earlier on account of the rise in primary and food articles. Primary articles were up by 1%, food articles rose 1.4% and non-food articles 0.2 %. The annual inflation rate was 3.46% during the corresponding week of the previous year.

According to the Finance minister of India, the PSU banks have no exposure to US financial crisis. He said that there is no cause for alarm for the Indian financial institutions and banks that are largely insulated from the crisis that gripped the financial system of US. Indian operations of US based AIG and commercial banks in the country are in sound health. There is no reason and need to worry as AIG''s life and non-life insurance businesses in India are in 26:74 ratio with the Tata.

On Thursday, the US market rallied on hopes of a fix from Fed as government is considering a permanent solution to the credit crisis. Along with that world’s top central banks poured billion dollars into the global market to help banks in trouble. Crude oil for October delivery added 72 cents to settle at $97.88 a barrel on the New York Mercantile Exchange.

The Dow Jones Industrial Average (DJIA) closed higher by 410.03 points to close at 11,019.69 followed by the NASDAQ index ended up by 100.25 points at 2,199.10 and the S&P 500 (SPX) gained 50.12 points to close at 1,206.51.

Indian ADRs ended up. In technology sector, Wipro ended higher by (7.52%) followed by Patni Computers advanced by (2.28%), Infosys gained (1.66%) and Satyam went up by (1.53%). In banking sector ICICI Bank and HDFC Bank gained (11.77%) and (11.21%). In telecommunication sector, MTNL and Tata Communication advanced by (15.19%) and (9.63%). Sterlite industries increased by (9.53%).

Today the major stock markets in Asia are trading higher. Hang Seng index is trading up by 1081.39 points at 18,713.85 along with Japan’s Nikkei higher by 378.90 points at 11,868.20, Taiwan Weighted gained 304.58 points at 5,946.53 and Singapore''s Straits surged 97.10 points at 2,516.31.

The FIIs on Thursday stood as net seller in equity and in debt. Gross equity purchased stood at Rs3,762.00 Crore and gross debt purchased stood at (Rs8,712.70) Crore while the gross equity sold stood at Rs5,095.50 Crore and gross debt sold stood at Rs629.20 Crore. Therefore, the net investment of equity reported was (Rs1,333.50) Crore and net debt was (Rs9,341.90) Crore.

On Thursday India''s rupee dropped on concern of global stocks disorder and Morgan Stanley’s talks on possible merger with Chinese bank CITIC. The rupee closed at 46.42/43 per dollar, 0.2% weaker than 46.34/35 at close on Wednesday.

To protect the depreciating currencies, Asian authorities are discharging money into the markets. Along with that China relaxed its policies for second time this week and Japan, Australia and India pumped a further $28 billion into money markets. Bank of Japan injected an additional $14.35 billion into the short-term money market to provide liquidity. Australian Central Bank added A$23.92 billion, bringing its injection this week to A$11.2 billion. In India, the central bank supplied $1.35 billion to banks. China central bank allowed yields on its three-month bills to drop 4 basis points to at an auction after keeping the rate steady for six month.

Today, Nifty has support at 3,976 and resistance at 4,254 and BSE Sensex has support at 13,038 and resistance at 13,984.