Pre Session Commentary - Sep 30 2008

Today the Market would open negative and nose-dive in deep red as the $700 billion rescue bail out was defeated in the House of Representatives. After the defeat of the bail out bill, the US market crashed hugely as investors had no confidence in the Wall Street. Most of the heavy stocks in the Wall Street have plummet since 1987. The weak sentiments of the investors further deteriorated as the three major European banks came out for a bail out help. On the other hand, Citigroup acquired the Wachovia banking operations for roughly $2 billion in deal facilitated by FDIC. To fund this acquisition the Citi group will raise $10 billion in a common stock offering and cut is dividend by 50%. In order to improve the strength of the Dollar Liquidity, the Fed has coordinated with nine central banks across the globe to more than double their swap authorization limits to $620 billion. Besides that the Fed is also increasing the size of its Term Auction Facilities.

On Monday, the bears have once again clawed down the market brutally by 595.75 points, recording a 52 week lowest mark. The Realty and Banking sectors were brutally thrashed by the bears. The market was mainly influenced by the meltdown in the European market where European financial giants like UK’s Bradford & Bingley Plc, Belgium’s Fortis Financial, and Germany’s Hypo Real Estate Holding AG drowned due to the US credit crisis. The investors are very concerned about the weakness and chronic financial crisis happening across the world. Companies like Bear Stearns, Fannie Mae, Freddie Mac, Lehman Bros, AIG, Washington Mutual, Fortis Financial, Bradford & Bingley have already declared themselves bankrupt seeking a bail out or bridge loan from their respective government. These incidents are just reinforcing the skepticism of investors’ sentiment about the strength of the global financial giants. In order to save the Fortis financial, the regulators in Belgium, the Netherlands and Luxembourg injected 11.2 billion euros ($16.3 billion) as a last resort. Every day a new financial company is added on the list of bail out firms, and who knows many more are yet to come on the list in near future. During the trading session we expect the market to trade in deep red amidst concerns in the US and the falling Asian Indices.

The BSE Sensex closed lower by 506.43 points at 12,595.75 and NSE Nifty ended down by 135.2 points at 3,850.05. The BSE Mid Caps and Small Caps closed with losses of 211.49 points and by 308.75 points at 4,729.33 and 5,553.03. The BSE Sensex touched intraday high of 13,113.53 and intraday low of 12,402.84.

On Monday, the US market crashed with huge selling pressure as the bail out plan was defeated in the US senate house. This negative sentiment ruined the market brutally and all the major indices plunged in deep red. Crude oil futures for the month of November delivery plunged $10.52 at $96.37 per barrel on New York Mercantile Exchange. The oil prices are further expected to come down as the demand for oil in future would fall due to the economic slowdown in US. Further the Euro lost some charm against dollar, thus strengthening the latter due to the bail out of three major European banks. The rising dollar also contributed in the fall of the oil prices to some extent.

The Dow Jones Industrial Average (DJIA) was down by 777.68 points at 10,365.45 along with NASDAQ index, which was low by 199.61 points at 1,983.73 and the S&P 500 (SPX) low by 106.59 points to close at 1,106.42 points.

Indian ADRs ended down. In technology sector, Satyam closed down by (17.50%) followed by Wipro by (13.37%), Infosys ended lower by (12.67%) and Patni Computers by (4.48%). In banking sector HDFC Bank and ICICI Bank lost (16.78%) and (12.47%). In telecommunication sector, Tata Communication and MTNL plunged (17.00%) and (8.03%). Sterlite Industries decreased by (12.28%).

Today the major stock markets in Asia opened in deep red territory on the back of negative cues from the US market as the $700 billion bail out plan was rejected in the House of Representatives. And further the European major banks calling out for a bridge loan started the negative sentiment since yesterday. Hang Seng index is trading down by 399.61 points at 17,481.07. Followed by, Japan''s Nikkei which was low by 430.63 points at 11,312.98 and Singapore''s Straits trading at 2,313.60 down by 47.74 points.

The FIIs on Monday stood as net seller in equity and debt. Gross equity purchased stood at Rs2712.20 Crore and gross debt purchased stood at Rs136.80 Crore while the gross equity sold stood at Rs3316.30 Crore and gross debt sold stood at Rs322.10 Crore. Therefore, the net investment of equity reported was (Rs604.10) Crore and net debt was (Rs185.20) Crore.

On Monday, the rupee dived to a 5 year low due to weak global cues and dollar demand from oil companies. The Oil marketing companies are paying nearly $8 billion per month to set off their monthly dues, hence creating huge demand for the green back. The Rupee closed at 46.95/96 per dollar, and touched an intraday high of 47.11, which was its lowest since June 2, 2003.

On BSE, total number of shares traded were 27.50 crores and total turnover stood at Rs4,594.16 crores. On NSE, total volumes of shares traded were 55.56 crores and total turnover was Rs13118.7 crores.

Top traded volumes on NSE Nifty – ICICI Bank with total volume of 21497419 shares followed by Unitech 14111766 shares, Suzlon Energy 12646388 shares, Reliance Petro 10751860 shares and ITC 8693592 shares.

On NSE Future and Options, total number of contracts traded in index futures was 1033599 with a total turnover of Rs18822.07 crores. Along with this total number of contracts traded in stock futures were 912112 with a total turnover of Rs13457.5 crores. Total number of contract for index options was 1084398 and total turnover was Rs 22774.41 crores and total number of contracts for stock options was 51599 and notional turnover was Rs851.72 crores.

Today, Nifty would have a support at 3,651 and resistance at 3,825 and BSE Sensex has support at 12,010 and resistance at 12,525.