Pre Session Commentary - Dec 16 2008

Today we expect the market to open positive however later it may also turn volatile. The Asian markets have opened mixed and US markets closed in red. The sentiments across the broader markets may dwindle along with the southward movements in Asian markets. Yesterday the domestic markets pared off its early gains showing little sign of insecurity and skepticism amongst investors. The markets may be range bound today as there is hardly any news to drive the markets. As such investors may try to secure their positions with little risk.

On Monday, the markets opened with phenomenal positive gap. The sentiments across the Asian markets were bullish and the domestic trend retained its firmness till the end. Realty and Metal kept the rally high. The Advance tax numbers were also satisfactory and hence pumped more confidence amongst investors. Nifty after a long time broke the 3000 mark but later could not sustain the selling pressures. Sensex and Nifty gained by 1.47% and 2.05%. Realty, Metal, CD and PSU gained 5.53%, 5.19% 4.90% and 3.49% respectively. During the trading session we expect the market to be trading range bound with negative bias.

The BSE Sensex closed higher by 142.32 points at 9,832.39 and NSE Nifty ended up by 59.85 points at 2,981.20. The BSE Mid Caps and Small Caps ended with good gains of 114.59 points and 128.13 points at 3,165.07 and 3,659.09 respectively. The BSE Sensex touched intraday high of 9,948.33 and intraday low of 9,749.29.

On Monday, the US markets closed in red. The fate of the three Auto makers still looms in the dark despite White House signaled that a relief plan would be on the way. Market participants were also skeptic about the FOMC rate decisions. On the other hand FOMC is looking to induce economic growth through rate cuts. As such, fed funds futures imply a reduction to the fed funds target rate is certain. There is currently a 66% implied probability the target rate will be cut to 0.25% from 1.00%. There is a 34% implied probability the rate will be cut to 0.5%. Crude oil futures for the month of January delivery fell $1.77 to $44.51 per barrel on New York Mercantile Exchange. The crude oil fell because traders were skeptic that the production cut by OPEC would hardly support the price of oil.

The Dow Jones Industrial Average (DJIA) closed lower with 65.15 points at 8,564.53 NASDAQ index lost 32.38 points at 1,508.34 and the S&P 500 (SPX) also closed lower by 11.16 points to close at 868.57 points.

Indian ADRs ended negative. In technology sector, Infosys lost by 1.40% and Wipro also dropped by 3.14% followed by Satyam that lost 0.87% and Patni Computers closing high by 1.20%. In banking sector ICICI Bank lost 2.14%, while HDFC Bank lost 2.30%. In telecommunication sector, Tata Communication declined by 5.25%, while MTNL inclined by 0.91%.

Today the major stock markets in Asia opened mixed. The Shanghai Composite is trading low by 36.28 at 1,928.15 Hang Seng is high by 169.67 points at 15,216.62. Further Japan''s Nikkei is low by 77.41 points at 8,587.25. South Korea’s Seoul Composite is high by 2.11 points at 1,160.30 and Singapore’s Strait Times is low by 0.99 points at 1,773.77.

The FIIs on Monday stood as net seller in equity and net buyer in debt. Gross equity purchased stood at Rs 1527.00 Crore and gross debt purchased stood at Rs 876.50 Crore, while the gross equity sold stood at Rs 1633.40 Crore and gross debt sold stood at Rs 239.70 Crore. Therefore, the net investment of equity and debt reported were Rs (106.40) Crore and Rs 636.80 Crore respectively.

On Monday Indian Rupee gained strength at 48.05/06 a dollar, 0.8% stronger than Friday''s close of 48.43/45. The phenomenal gain in the capital markets helped the Rupee gain strength despite huge demand for Dollars from the Oil refineries. Traders are optimistic about foreign capital inflow due to bullish sentiments prevailing now.

On BSE, total number of shares traded were 40.02 Crore and total turnover stood at Rs 4,381.42 Crore. On NSE, total number of shares traded were 81.84 Crore and total turnover was Rs 11,077.60 Crore.

Top traded volumes on NSE Nifty – Unitech with 65792850 shares, Suzlon Energy with total volume traded 33194570 shares, followed by Reliance Petro with 29003569 shares, SAIL with 16260024 shares and DLF with 15485141 shares.

On NSE Future and Options, total number of contracts traded in index futures was 8,28641 with a total turnover of Rs 11,461.31 Crore. Along with this total number of contracts traded in stock futures were 10,09116 with a total turnover of Rs 10,568.19 Crore. Total numbers of contracts for index options were 9,95270 with a total turnover of Rs 14,810.87 Crore and total numbers of contracts for stock options were 72552 and notional turnover was Rs 805.49 Crore.

Today, Nifty would have a support at 2,910 and resistance at 3,055 and BSE Sensex has support at 9,665 and resistance at 9,998.