Pre Session Commentary - Oct 20 2008

Today Markets are likely to open positive today as enough carnage was seen on Friday when the Sensex breached the 10k support level. After some value buying we expect the markets to be trading volatile during the day. The support level of 10k is blown up and therefore sentiment of investors about the next support level is in dark. There is not much good or bad news in the macro economic environment, which could move the markets in the red or green. Therefore the movements of the markets now would totally depend on the sentiments prevailing amongst the investors. The government’s credit policy is yet to come by the end of this week and till then the markets would probably trade volatile.

On Friday, domestic Markets opened positive and remained volatile until after the post mid session when it started diving in the deep red territory. The volatility was extreme and the positive sentiments crumbled after the post mid session. The sentiments were very negative despite positive cues from the European markets which traded in green. The closing of the week brought cautiousness and hence traders booked their positions. Realty, Power and Metal stocks were brutally shattered which brought the Sensex down below 10000 mark. The sectors hit hard were Realty, Power, Metal, Teck and CG that recorded fall of 10.25%, 8.09%, 6.12%, 5.91% and 5.52% respectively. During the trading session we expect the market to be trading volatile.

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The BSE Sensex closed lower by 606.14 points at 9,975.35 and NSE Nifty ended down by 194.95 points at 3,074.35. The BSE Mid Caps and Small Caps closed with loss of 112.29 points at 3,544.84 and by 118.50 points at 4,167.86. The BSE Sensex touched intraday high of 10,786.93 and intraday low of 9,911.32.
On Friday, US markets ended in the red territory with. The negative sentiments occurred due to the data released indicating weak U.S. housing. Housing starts in September fell 6.3% well below the expectations to an annualized rate of 817,000 units. This was considered to be the lowest level since January 1991. Further building permits dropped 8.3% to an annualized rate of 786,000. The weak housing sector is expected to weaken the GDP growth and may also spur write downs at financial firms. However on the other hand, the latest quarterly results of IT sector were much better than the expectations. Companies like Google, Advanced Micro Devices and Honeywell surprised the market with better than expected results. Warren Buffet also made a public statement that he has been picking up stocks to add on his portfolio as stocks look very attractive at the current rates. Crude oil futures for the month of November delivery rose by $1.34 a barrel by at $73.19 a barrel on New York Mercantile Exchange. This rise in crude oil price happened after OPEC confirmed about reducing the oil production to support the price level. OPEC produces nearly 40% of the world’s oil.
The Dow Jones Industrial Average (DJIA) closed lower by 127.04 points at 8,852.22. NASDAQ index also declined by 6.42 points at 1,711.29 and the S&P 500 (SPX) was low by 5.88 points to close at 940.55 points.

Indian ADRs ended mixed. In technology sector, Wipro gained by (7.95%) followed by Satyam that ended low by (1.06%) and Patni Computers was low by (2.78%). In banking sector ICICI Bank was high by (9.93%), while HDFC Bank fell (5.79%). In telecommunication sector, Tata Communication declined by (7.79%), while MTNL fell by (2.25%). Sterlite Industries was low by (6.99%).

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Today the major stock markets in Asia opened mixed. The Shanghai Composite is trading low by 14.10 points, at 1,916.55. Hang Seng is high by 411.63 points at 14,936.33. Further Japan''s Nikkei is high by 129.27 points at 8,823.09. Straits Times is trading is also trading high by 33.96 points at 1,912.47 and South Korea’s Seoul Composite is high by 7.77 points at 1,188.52.

The FIIs on Friday stood as net sellers in equity and debt. Gross equity purchased stood at Rs2233.60 Crore and gross debt purchased stood at Rs179.70 Crore, while the gross equity sold stood at Rs4144.90 Crore and gross debt sold stood at Rs473.80 Crore. Therefore, the net investment of equity and debt reported were (Rs1911.30 Crore) and (Rs 294.00 Crore) respectively.

On Friday, the partially convertible rupee dropped to 48.88/89 per dollar, its lowest close since June 25, 2002 weaker than Thursday''s close of 48.82/83. The rupee fell to its lowest close in more than six years on Friday, on domestic market losses rising concern of capital outflows.

On BSE, total number of shares traded was 25.26 crores and total turnover stood at Rs 4,134.51 crores. On NSE, total volume of shares traded was 51.66 crores and total turnover was Rs 10,486.83 crores.

Top traded volumes on NSE Nifty – ICICI bank with total traded volume of 19613823 shares, followed by Suzlon with 14605181 shares, NTPC with 12227954 shares, Reliance Petro with 10959820 shares and Unitech with 10332369 shares respectively.

On NSE Future and Options, total numbers of contracts traded in index futures were 1194841 with a total turnover of Rs 18098.12 Crore. Along with this total number of contracts traded in stock futures were 1107650 with a total turnover of Rs13495.7 Crore. Total numbers of contracts for index options were 1332782 and total turnover was Rs23404.65 Crore and total numbers of contracts for stock options were 60627 and notional turnover was Rs 894.25 Crore.

Today, Nifty would have a support at 2,910 and resistance at 3,220 and BSE Sensex has support at 9,750 and resistance at 10,650.