Dec 10 2008 Morning Commentary

Today markets are likely to open positive due to the feel good factor after the stimulus package announced on Sunday. However the risk aversion and cautious trading may trap the markets in volatility. There are also news that the Indian BPO industry which is estimated to be worth $11 billion may cut 2.5 lakh jobs in the first half of 2009, if the government doesn’t come out with a bailout package for the industry. The other sectors like realty are also under pressure due to fall in demand and high interest rates. Therefore the overall sentiments in the markets are not that strong enough to bring firmness. One could anticipate some volatility in the markets throughout the trading session.

On Monday, the markets opened with a positive gap and managed to retain firmness till the end. The government stimulus package worth Rs 30,700 crore and other host of reforms in the form of Repo and Reverse Repo cut by 100bps to 6.5% and 5% respectively has helped regain some charm in the sentiments of the markets. Sectors like Auto and Banking are benefited the most and investors are optimistic about some revamp happening in the demand for loans and automobiles. Sensex and Nifty gained by 2.20% and 2.56%. Realty, Metal, CD, Power and Banking gained 5.27%, 3.05%, 2.78%, 2.78% and 1.71% respectively. During the trading session we expect the market to be trading volatile.

The BSE Sensex closed with a gain of 197.42 points at 9,162.62 and NSE Nifty ended higher by 69.60 points at 2,784.00. The BSE Mid Caps ended with a marginal loss of 7.92 points at 2,885.03, whereas Small Caps ended with gains of 19.66 points at 3,343.20. The BSE Sensex touched intraday high of 9,432.11 and intraday low of 9,095.70.

On Tuesday, the US markets closed negative due to risk aversion. Companies like Texas instruments and Fedex have given downside earnings estimate. On the macro economic level pending home sales fell in October by 0.07%, better than expected fall of 3.0%. On the other hand Auto makers were on the limelight as the White House is working out towards a financial aid agreement. Crude oil on New York Mercantile Exchange for January fell by $1.64 cents to $42.07 a barrel. Crude oil fell after the U.S. Department of Energy predicted a $51.17 per barrel average for 2009.

The Dow Jones Industrial Average (DJIA) closed lower with 242.85 points at 8,691.33 NASDAQ index lost 24.40 points at 1,547.34 and the S&P 500 (SPX) also closed lower by 21.03 points to close at 888.67 points.

Indian ADRs ended mixed. In technology sector, Infosys lost by 3.71% and Wipro ended high by 2.15% followed by Satyam that lost 1.62% and Patni Computers closing low by 1.22%. In banking sector ICICI Bank lost 3.33%, while HDFC Bank fell by 4.35%. In telecommunication sector, Tata Communication inclined by 3.18%, while MTNL declined by 1.65%.

Today the major stock markets in Asia opened mixed. The Shanghai Composite is trading low by 31.83 at 2,005.91 Hang Seng is high by 329.56 points at 15,082.78. Further Japan''s Nikkei is high by 95.68 points at 8,491.55. South Korea’s Seoul Composite is high by 31.90 points at 1,137.74.

The FIIs on Monday stood as net buyers in equity and net sellers in debt. Gross equity purchased stood at Rs 1,182.10 Crore and gross debt purchased stood at Rs 151.90 Crore, while the gross equity sold stood at Rs 1,130.90 Crore and gross debt sold stood at Rs 315.70 Crore. Therefore, the net investment of equity and debt reported were Rs 51.20 Crore and Rs (163.80) Crore respectively.

On Monday, the partially convertible rupee ended at 49.58/59 per dollar as against 49.57/58 on Friday last week. The rupee remained flat today little changed from the previous day.

On BSE, total number of shares traded was Rs 24.70 Crore and total turnover stood at Rs 3,243.32 Crore. On NSE, total volume of shares traded was Rs 58.34 Crore and total turnover was Rs 9,418.98 Crore.

Top traded volumes on NSE Nifty – Unitech with 74370515 shares, Suzlon Energy with total volume traded 32557379 shares, followed by DLF with 20190887 shares, SAIL with 17677935 shares and Tata Steel with 16184726 shares.

On NSE Future and Options, total number of contracts traded in index futures was 988891 with a total turnover of Rs 12,949.04 Crore. Along with this total number of contracts traded in stock futures were 864948 with a total turnover of Rs 9,008.09 Crore. Total numbers of contracts for index options were 1137017 with a total turnover of Rs 16,423.50 Crore and total numbers of contracts for stock options were 59516 and notional turnover was Rs 670.54 Crore.

Today, Nifty would have a support at 2,715 and resistance at 2,843 and BSE Sensex has support at 8,950 and resistance at 9,328.