Market seen lower on negative global cues

Key benchmark indices are likely to edge lower in volatile trade mirroring negative global cues.

Asia stock markets retreated for a third straight day today, 23 December 2008. China's Shanghai Composite plunged 1.24% or 24.71 points at 1,963.05, Hong Kong's Hang Seng tumbled 1.26% or 184.45 points at 14,437.94, Singapore's Straits Times declined 0.76% or 13.27 points at 1,732.36, South Korea's Seoul Composite slipped 2.23% or 26.35 points at 1,153.26 and Taiwan's Taiwan Weighted fell 2.28% or 103.31 points at 4,432.23.

US stocks closed lower on Monday, 22 December 2008 amidst gloomy outlooks from companies like Toyota Motors. Caterpillar reportedly predicts a slump in global economy and lower energy demand. The Dow fell 59.34 points, or 0.69%, to 8,519.77. The S&P 500 index slipped 16.25 points, or 1.83%, to 871.63, and the Nasdaq composite index declined 31.97 points, or 2.04%, to 1,532.35.

Back home, volatility may rise ahead of the December series F&O contracts expiry on Wednesday, 24 December 2008. As per reports, rollover of Nifty and marketwide positions from December 2008 series to January 2009 series stood at 40% as of Monday, 22 December 2008.

There is a possibility of dip in trading volumes due to a likely decline in foreign institutional participation on account of the Christmas and New Year celebrations. In that case, domestic institutions are expected to play a key role in determining the market direction. Market remains closed on Thursday, 25 December 2008 on account of Christmas.

Investors resorted to profit booking on weakness in global stocks pulling the barometer indices lower on Monday, 22 December 2008. The BSE 30-share Sensex lost 171.56 points, or 1.7%, to 9,928.35 and the S&P CNX Nifty was down 38.20 points, or 1.24%, to 3,039.30, on that day.

Foreign institutional investors (FIIs) were net sellers worth Rs 191.49 crore while mutual funds bought shares worth Rs 207.55 crore on Monday, 20 December 2008, according to provisional data on NSE.