Pre Session Commentary - Nov 3 2008

Today a market is expected to have gap up opening on firm global cues. Reserve Bank of India’s triple dose of cut in repo rate, CRR and SLR, will also contribute to life the sentiments. The move comes close with the US Federal Reserve’s cut in its benchmark interest rates by 0.5% to 1% on October 30 and Bank of Japan’s cut in interest rates from 0.5% to 0.3%.

On Friday, domestic market closed with huge gains on significant buying across the ground. Sentiments got boosted on drop in inflation number for the fifth successive week and firm global markets. Market witnessed strong rally also on speculation that RBI may ease monetary policy following rate cuts across the world, including in the US, China and Japan this week. Bank of Japan cut rates for the first time in seven years, to 0.30% from 0.50% to ease the financial crisis. Today market opened after a holiday with handsome gains tracking positive cues from global markets. Stocks continued to gain ground on sustained buying over the counters. However, market gave up some of initial gains during afternoon on profit booking, but further continued its upward trend till end. From the sectorial front, buying support was seen across all the indices mainly led by the Metal, Oil & Gas, Bank, Capital Goods, IT and Auto stocks. We expect that market to continue its momentum and gain further ground during the trading session.

The BSE Sensex closed higher by 743.55 points at 9,788.06 and NSE Nifty ended up by 188.55 points at 2,885.60. The BSE Mid Caps and Small Caps closed with gains of 105.54 points 3,200.02 and by 90.50 points at 3,765.11. The BSE Sensex touched intraday high of 9,870.42 and intraday low of 9,361.66.

RBI has cut the repo rate by 50 basis points to 7.5% with effective from 3rd November. It has also cut CRR, by 100 basis points in two stages to 5.5%. The first stage of CRR cut would be with effect from 25th October and the second stage would come into effect from 8th November. The central bank has also reduced the statutory liquidity ratio (SLR), the amount which banks are mandated to park in government securities, by 100 basis points to 24%. The SLR cut would inject about Rs 40,000 crore into the banking system.

Friday, the US stock market rallied for second successive day. Stocks gained after J.P. Morgan unveils $70B mortgage-modification. September personal income and spending numbers were down 0.3%. Crude oil futures for the December delivery rose $1.85 to $67.81 a barrel on New York Mercantile Exchange.

The Dow Jones Industrial Average (DJIA) closed higher by 144.32 points at 9,325.01. NASDAQ index gained 22.43x points to 1,720.95 and the S&P 500 (SPX) surged 14.66 points to close at 968.75 points.

Indian ADRs ended mixed. In technology sector, Infosys ended higher by (0.03%) while Wipro lost (5.26%), Satyam ended down by (2.24%) and Patni Computers closed lower by (1.36%). In banking sector ICICI Bank was up by (7.18%) and HDFC Bank gained (1.41%). In telecommunication sector, Tata Communication inclined by (20.50%), and MTNL was up by (0.68%). Sterlite Industries increased by (16.35%).

Today major stock markets in Asia are trading higher. Hang Seng is higher by 566.46 points at 14,535.13. Further Taiwan Weighted jumped 116.69 points at 4,987.35 and Singapore''s Straits Times also surged 94.89 points at 1,889.09. The South Korea’s Seoul Composite gained 40.18 points at 1,153.24. Japan''s Nikkei is closed today for the Culture day holiday. It will reopen on Tuesday.

The FIIs on Friday stood as net seller in equity and net buyer in debt. Gross equity purchased stood at Rs2685.90 Crore and gross debt purchased stood at Rs156.70 Crore, while the gross equity sold stood at Rs3760.80 Crore and gross debt sold stood at Rs135.20 Crore. Therefore, the net investment of equity and debt reported were (Rs1074.90 Crore) and Rs21.50 Crore respectively.

On Friday, the Indian rupee extended its gain for the third straight session on Friday closing higher at 49.44/46. India''s rupee strengthened due to the gains in domestic stock market, which raised hopes of some further cash inflows.

On BSE, total number of shares traded was 26.98 Crore and total turnover stood at Rs. 3,717.17 Crore. On NSE, total volume of shares traded was 66.55 Crore and total turnover was Rs 12,242.1 Crore.

Top traded volumes on NSE Nifty – Suzlon Energy with total traded volume of 37494677 shares, followed by Hindalco with 34649169 shares, Unitech Ltd with 25139509 shares, RPL with 21266401 shares and ICICI Bank with 14134982 shares respectively.

On NSE Future and Options, total numbers of contracts traded in index futures were 1072629 with a total turnover of Rs.14,412.82 Crore. Along with this total number of contracts traded in stock futures were 903388 with a total turnover of Rs.9,819.66 Crore. Total numbers of contracts for index options were 806308 and total turnover was Rs.12.273.03 Crore and total numbers of contracts for stock options were 40077 and notional turnover was Rs.453.72 Crore.

Today, Nifty would have a support at 2,837 and resistance at 3,043 and BSE Sensex has support at 9,546 and resistance at 10,284.