Govt worried about inflation

The government on Friday said it was was increasingly concerned that there was no let up in inflation, while blaming part of the surge in wholesale prices on the base year effect.

"Wholesale Price Index (based inflation) continues to be a matter of concern...(but) without underplaying the seriousness of the concern, we wish to place the matter in perspective," said a statement issued by the Finance Ministry.

Base effect relates to inflation in the year-ago period, wherein if the rate of prices was too low, even a small rise in WPI now would arithmetically lead to a huge rise in inflation numbers.

"The annual point-to-point inflation is largely influenced by the trend in the corresponding week of the previous year, which is the base year," the statement said, explaining that in the previous year there was a decline in the price index from 4.39 percent to 4.24 percent.

This trend may continue till October-November this year, as the index had declined up to November 24, 2007.

The statement said the other part of the problem was supply side and noted that prices of fruits, vegetables, milk, tea etc are largely governed by localised supply demand factors and any other local disruptions like rain etc.

It is the movement of prices of these items that are impacting the prices of primary articles, it added.

Post Session Commentary - Aug 22 2008

The domestic market rebounded from earlier losses to close in positive territory on the back of sustained buying in key stocks. Market opened on negative note tracking weak cues from Asian markets along with rise in crude oil prices and higher inflation number that stood at 12.63% for the week ended 9th August 2008 as against 12.44% previous week. Crude oil raised by $5.96 to $121.61 per barrel on New York Mercantile Exchange. Further market turned volatile as investors took calculative steps to book their positions. Strong buying in key stocks forced market to gain some ground since mid session and further market extended its gains till end. Favorable cues from European markets helped markets to remain positive in second half of session. NSE Nifty ended above 4,300 mark and BSE Sensex above 14,400 level. From the sectoral front, buying was seen in Metal, Oil & Gas, Bank, Consumer Durables and Auto stock. Mid caps also recovered to end in green while Small caps stocks closed lower. The market breadth was negative as 1414 stocks closed in red, 1209 stocks closed in green while 102 stocks remained unchanged.

Inflation for the week ended 9th august 2008, stood at 12.63% from 12.44% of previous week. Inflation was 4.24% during the corresponding week last year. This rise, which is 16 year high is mainly due to increase in prices of food items like fruits, vegetables and milk. Price of cotton yarn was up by eight% during the week and polyester became dearer by seven%.

The NSG is discussing to approve India to share US Nuclear Technology. The second round of deliberations will start today and India is confident of getting a waiver from strict export guidelines by Saturday. The NSG waiver for India will mean the government can enter into nuclear commerce with countries like Russia and France, despite results of the 123 Agreement on the Indo-US civilian nuclear co-operation in the US Congress.

The BSE Sensex closed higher by 157.76 points at 14,401.59 and NSE Nifty ended up by 43.60 points at 4,327.45. The BSE Mid Cap closed with gains of 19.39 points at 5,726.85 while Small Cap down by 11.17 points at 6,925.85. The BSE Sensex touched intraday high of 14,428.52 and intraday low of 14,136.86.

Gainers from the BSE are Sterlite In (4.34%), Hindalco (4.26%), HUL (3.73%), HDFC (3.22%), BHEL (2.76%), Tata Power Co (2.65%), Reliance Infra (2.53%), HDFC Bank Ltd (2.48%) and Maruti Suzuki (2.18%).

The BSE Metal index ended up by 197.02 points at 12,363.93. Gainers are SAIL (4.40%), Sterlite In (4.34%), Hindalco (4.26%), Ispat Indus (2.00%), Hindustan Zinc (1.71%), and Nalco (1.16%).

The BSE Oil & Gas index gained 103.54 points to close at 9,941.66. As Reliance Petroleum (2.03%), Cairn India (1.65%), Reliance (1.51%), Reliance Natural Resources (1.38%), Essar Oil Ltd (1.37%) and ONGC (0.69%) closed in positive territory.

The BSE Bank index advanced 77.85 points to close at 6,655.76. Major gainers are Axis Bank (4.75%), Kotak Bank (3.38%), HDFC Bank Ltd (2.48%), IDBI Bank Ltd (2.37%), Bank of India (1.98%) and IOC (1.46%).

The BSE Consumer Durables index gained 42.60 points to close at 3,798.75. Major gainers are Titan Indi (4.54%), Rajesh Export (1.22%), Blue Star L (0.17%) and Videocon Ind (0.02%).

The BSE Auto index closed higher 39.34 points at 3,839.52. Gainers are Exide Indus (4.30%), Maruti Suzuki (2.18%) Tata Motors (1.83%), Bajaj Auto (1.80%), Ashok Leyland (0.95%), and Hero Honda Motors (0.42%).

The BSE Reality index closed marginally lower by 0.09 points at 4,944.73. Lossers are Ansal Infra (4.38%), Indiabull Real (3.21%), Orbit Co (2.76%), Unitech Ltd (0.84%), Penland Ltd Ltd (0.30%), and Mahindra life (0.28%).

FMCG Sector

FMCG Sector

Volatility may rise ahead of derivatives expiry

The market may remain under pressure next week after inflation recorded fastest rise in more than 16 years in early August 2008, increasing the likelihood of the Reserve Bank of India (RBI) raising interest rates again.

With no major key events scheduled in the forthcoming week, the market will closely watch global stock market cues. But it may turn volatile on account of expiry of August 2008 derivatives contracts on Thursday, 28 August 2008.

The wholesale price index rose 12.63% in 12 months to 9 August 2008, above the previous week's annual rise of 12.44%, government data released on Thursday, 21 August 2008, showed. Inflation for the week ended 14 June 2008 was revised upwards to 11.80% from 11.42%.

Rising inflation rate has dashed hopes of any relaxation in the monetary policy. Market expects Reserve Bank of India (RBI) to raise the rates further in its next monetary policy review two months from now.

On 29 July 2008, the Reserve Bank of India (RBI), at its quarterly policy review, raised repo rate by 50 basis points to a seven-year high of 9% to curb inflation and dampen inflationary expectations. RBI also raised the cash reserve ratio (CRR), the proportion of funds that banks must keep on deposit with it, by 25 basis points to 9%.

Market will closely watch developments on the Indo-US nuclear deal. A two-day meeting of the 45 countries of the Nuclear Suppliers Group (NSG) began in Vienna on Thursday, 21 August 2008. A green signal by the NSG is required for the deal to proceed to the US Congress for final ratification. As per reports, nuclear supplier nations at a meeting on Thursday, 21 August 2008, proposed conditions for lifting a global ban on fuel and technology exports to India, a step required to implement a US-India nuclear cooperation deal.

A further rise in crude oil prices may act as a dampener for the stock markets. Light, sweet crude for September 2008 delivery surged $5.62 to $121.18 a barrel on Thursday, 21 August 2008 on the New York Mercantile Exchange (NYMEX) on weaker dollar and worries about tightening output from OPEC countries.

Foreign institutional investors (FIIs) sold shares worth Rs 831.40 crore in August 2008 (till 20 August 2008). FIIs sold shares worth Rs 28,133.40 crore in the calendar year 2008. Mutual funds sold shares worth Rs 886 crore in August 2008 (till 20 August 2008).

Metal shares rise as market clocks modest gains

Key benchmark indices recovered some of yesterday’s (21 August 2008) steep losses. The market extended gains in late trade to touch intra-day high before paring gains. The BSE Sensex provisionally rose 140 points. Hindalco Industries and Sterlite Industries rose more than 4% each, as metal prices rose on the London Metal Exchange (LME).

European markets were in green. France’s CAC 40, Germany’s DAX and UK’s FTSE 100 were up between 0.59% to 1%.

India's wholesale prices index rose 12.63% in the year through 9 August 2008, up from the previous week's 12.44% rise, data released by the government after trading hours on Thursday, 21 August 2008, showed.

Oil price surged. Light, sweet crude for September 2008 delivery surged $5.62 to $121.18 a barrel yesterday, 21 August 2008 on the New York Mercantile Exchange (NYMEX) on weaker dollar and worries about tightening output from OPEC countries.

Meanwhile, as per reports, nuclear supplier nations at a meeting in Vienna on Thursday, 21 August 2008, proposed conditions for lifting a global ban on fuel and technology exports to India, a step required to implement a US-India nuclear cooperation deal. A green light from the 45-nation Nuclear Suppliers Group is needed for the deal to proceed to the US Congress for final ratification.

The BSE 30-share Sensex provisionally ended up 139.64 points or 0.98% to 14,383.37. The market had staged a comeback from early lows as heavyweights rebounded. A rally in crude oil prices weighed on the sentiment in opening trade.

Sensex opened 90.34 points lower at 14,153.39 and slipped further to a low of 14,136.86 in early trade. At the day’s low, the Sensex lost 106.87 points. At the day’s high of 14,428.52 points hit in late trade, the Sensex gained 184.79 points.

The S&P CNX Nifty was up 64.17 points or 0.84% to 4,319.65 as per the provisional figures.

BSE clocked a turnover of Rs 4,041 crore today as compared to a turnover of Rs 4,134.96 crore on 21 August 2008.

The market breadth was negative on BSE with 1414 shares declining as compared to 1,204 that advanced. 105 remained unchanged.

Among the 30-member Sensex pack, 21 gained while the rest of them slipped.

India’s largest private sector firm by market capitalization and oil refiner Reliance Industries (RIL) rose 1.43% at Rs 2,244, off day’s low of Rs 2191. The Bombay High Court on Thursday, 21 August 2008, suggested that the warring Ambani brothers go back to their mother Kokilaben and have the dispute settled.

The division bench of Justices JN Patel and KK Tated are hearing the dispute between the Anil-Ambani controlled Reliance Natural Resources (RNRL) and Mukesh Ambani’s Reliance Industries (RIL) over supply of natural gas from the later's eastern offshore Krishna-Godavari gas fields. Ram Jethmalani, counsel for RNRL, said Anil Ambani was ready to meet his elder brother any time, any place. The case hearing has been adjourned to 1 September 2008.

BSE Metal index rose 1.44% to 12,342.70 and was the top gainer from sectoral indices on BSE. Metal shares rose tracking rally in global metal prices. Steel Authority of India (up 5.02% to Rs 151.60), Sterlite Industries (up 4.21% to Rs 626), Hindalco Industries (up 4.03% to Rs 134.25), Hindustan Zinc (up 1.71% to Rs 576.40), National Aluminum Company (up 0.26% to Rs 387.90), and Tata Steel (up 0.87% to Rs 594.45) edged higher.

Hindustan Unilever (up 3.73% to Rs 244.85), HDFC (up 3.22% to Rs 2280.65), Bharat Heavy Electricals (up 2.76% to Rs 1,715.95), Reliance Infrastructure (up 2.53% to Rs 978.85), Tata Power Company (up 2.65% to Rs 1,050.75), Infosys (up 1.84% to Rs 1,695.05) edged higher from the Sensex pack.

Satyam Computer Services (down 3.18% to Rs 386.40), NTPC (down 2.54% to Rs 169.10), Grasim Industries (down 1.85% to Rs 1,929.10), Larsen & Toubro (down 0.88% to Rs 2,604.90), Wipro (down 0.93% to Rs 417.55) edged lower from the Sensex pack.

India’s second largest telecom services provider by sales Reliance Communications gained 1.86% to Rs 405.75 on reports the contentious issue of interconnection with GSM operators has been resolved. Reliance Communications (RCom) is launching its global system for mobile (GSM) services shortly. The issue of interconnection through which subscribers of one operator can talk to subscribers of another operator was reportedly resolved in a meeting between the Telecom Regulatory Authority of India (TRAI) and operators on Thursday, 21 August 2008.

Most of the Asian markets were trading lower today, 22 August 2008. Key benchmark indices in China, Japan, Taiwan and South Korea were down by between 0.1% and 1.09%. Singapore’s Straits Times rose 0.03%.

US stocks finished mixed on Thursday, 21 August 2008, after investors largely shrugged off a jump in oil prices and focused instead on a bullish call on Lehman Brothers Holdings that eased worries about the financial sector. The Dow Jones industrial average gained 12.78 points, or 0.11%, to 11,430.21. The S&P 500 index advanced 3.18 points, or 0.25%, to 1,277.72, and the Nasdaq Composite index slipped 8.70 points, or 0.36%, to 2,380.38.

Pre Session Commentary - Aug 22 2008

The Indian Market is expected to have negative opening as the Asian markets are trading lower and crude oil jumped further. On Thursday, the market reported sharp drop to close in deep red due to huge selling in financial and realty stocks. The domestic market opened on downbeat note tracking unfavorable cues from the Asian markets and further rise in crude oil. Further market continued to extend its losses ahead of inflation number for the week ended 9th August 2008. Heavy selling during final trading hours forced market to end in sharp negative terrain. Weak European markets also hit the investor’s sentiment NSE Nifty ended below 4,300 mark and BSE Sensex below 14,300 level. From the sectoral front, Bank and Reality stocks closed with deep cut of more than 5%. Along with that, Capital Goods, Metal, Oil & Gas, Power, IT and Pharma stocks also remained out of favour as witnessed most of the selling pressure. BSE Midcap and Smallcap stocks lost more than 2% and 1.5% respectively. The BSE Sensex closed lower by 434.50 points at 14,243.73 and NSE Nifty ended down by 131.90 points at 4,283.85. The BSE Mid Caps closed with losses of 118.91 points at 5,707.46 and Small Cap ended lower by 129.21 points 6,937.02. We expect that market may remain bearish during the trading session as the rising inflation may remain a concern for the investors for taking fresh positions.

Inflation for the week ended 9th august 2008, stood at 12.63% from 12.44% of previous week. Inflation was 4.24% during the corresponding week last year. This rise, which is 16 year high is mainly due to increase in prices of food items like fruits, vegetables and milk. Price of cotton yarn was up by eight% during the week and polyester became dearer by seven%.

On Thursday, the US market was closed mixed, on three major factors like rise in crude oil, about a government bailout of Fannie Mae and Freddie Mac, and a possible takeover of Lehman Brothers. On the New York Mercantile Exchange, oil raised $5.96 to $121.61 per barrel.

The Dow Jones Industrial Average (DJIA) closed higher by 12.78 points to close at 11,430.21. The S&P 500 (SPX) increased by 3.18 points to close at 1,277.72 while the NASDAQ index lost 8.70 points to close at 2,380.38.

Indian ADRs ended lower. In technology sector, Wipro ended lower by (3.14%) followed by Satyam dropped by (1.10%), Infosys by (0.91%) and Patni Computers by (0.19%). In banking sector ICICI bank and HDFC Bank lost (4.47%) and (2.95%). In telecommunication sector, MTVL advanced by (2.59%) while Tata Communication dropped by (2.93%). However, Sterlite industries increased by (1.36%).

Today the major stock markets in Asia are trading weak. Japan’s Nikkei is trading lower by 85.50 points at 12,666.71 along with Taiwan Weighted trading down by 59.93 points at 6,859.15, Seoul Composite trading 1,479.43 dropped by 33.16 points and Singapore''s Straits Times is flat at 2,713.25.

The FIIs on Thursday stood as net seller in equity and net buyer in debt. The gross equity purchased was Rs1,802.40 Crore and the gross debt purchased was Rs658.40 Crore while the gross equity sold stood at Rs2,087.80 Crore and gross debt sold stood at Rs267.90 Crore. Therefore, the net investment of equity reported was (Rs285.40) Crore and net debt was Rs390.50 Crore.

The rupee advanced by around 20 paise against the dollar breaking the week-long losing streak. The domestic currency opened at 43.73/74 and weakened to reach an intra-day low 43.77/78. It recovered to close at 42.51/52, against the previous close of 43.70/72

Today, Nifty has support at 4,187 and resistance at 4,329 and BSE Sensex has support at 13,872 and resistance at 14,373.

Daily Call - Aug 22 2008

The much awaited inflation number came in at 12.63%. This has been more than adequately discounted by yesterday's fall of 434 points in the Sensex and 131 point slide in the Nifty. If the markets do open lower, it may be due to the weak Asian cues prevailing at the open or the resurgence of crude that everybody thought had been given a quiet burial.

Strangely, the global markets took 12 days to realise that Russian tanks were not on a picnic in Georgia. Crude has risen for the third day on the trot, first time since 14th of July. Don't mistake the rise in the Dow as signal that US markets have ignored Crude surge. In fact the Dow's recovery is built around two oil stocks Chevron and Exxon Mobil, which were up following the Crude surge. The Nifty has broken through the 4316 level and the next support of 4150 assumes great significance, as a close below that would end the process of higher bottoms that the Indices had started to make. All eyes will now on the NSG outcome

Market may correct further

After crashing over 450 points in yesterday's trades the weakness in the market may continue. A slide in Asian indices and fall in the FII inflows in the domestic market may also see the market fall further. The sharp rise in Crude oil prices that may keep investors away from taking fresh positions. Among the local indices, the Nifty may slip to 4250 while on the upside it could test the 4350 level. The Sensex has a likely support at 14050 and could test higher levels at 14400.

US indices closed flat on Thursday on second-biggest one day gain in oil prices. While the Dow Jones gained by 13 points at 11430, the Nasdaq lost 9 points to close at 2380.

Indian floats trading on the US bourses had a mixed outing. Among the major losers ICICI Bank, Rediff, Wipro, HDFC Bank, VSNL Tata Motors and Satyam fell over 1-4% each. While Infosys and Patni Computers ended with marginal loss. MTNL and Dr Reddy gained over 1-2% each.

Crude oil prices moved up on a falling dollar and rising concerns about global supply, with the Nymex light crude oil for September series rising by $5.62 at $121.18 a barrel. In the commodity space, the Comex gold for December delivery flared up by $22.70 to settle at $839 a troy ounce.

A bright day for bullion metals

Gold and silver gain the most in two months and two years respectively

The weak dollar and substantial sudden rise in crude prices paved the way for bullion metals today, Thursday, 21 August, 2008 and both gold and silver registered good gains after a long time. Barring four sessions, gold and silver prices had registered losses in all the trading sessions in the current month of August, 2008. Silver prices also rose today.

Today, Comex Gold for December delivery rose $22.7 (2.8%) to close at $839 ounce on the New York Mercantile Exchange. It rose to an intra day high price of $844 earlier. Last week, the yellow metal gave up 8.4%. With today’s gain, gold has lost 8.55% in August, 2008 till date. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly (18%) since then.

This year, gold prices have gained a marginal 0.2% till date as the dollar rallied against the euro. It has lost almost $82 in August till now. Gold ended July, 2008 lower by $11 (1.1%).

Prior to that, the yellow metal ended second quarter with a marginal gain of 0.7%. It ended June, 2008 with a gain of 4.1%. In May, it ended with a gain of higher by $22.5 (2.5%). Before May, in April, prices closed lower by 6.3%. For first quarter prices gained 10.7%. In January, prices gained 11%, the highest monthly gain since April 2006. For February, it gained 6%. But in March, prices succumbed and fell by 5.5%.

On Thursday, Comex silver futures for September delivery rose 69 cents (5.2%) to $13.843 an ounce. This was the largest one day gain for a current silver contract in almost two years. With today’s rise silver has lost almost 7.2% in 2008 till date. Last week, it gave up 16.4%. It ended July 2008 with a gain of 3%. For the second quarter, it had gained a paltry 1.4%. Silver had gained 16% in Q1. The metal also had gained for seven straight years.

Gold and silver prices have dropped 18% and 31% from their all time highs that they reached earlier this year.

Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies. On the other hand, a lower dollar pushes up precious metal prices as their demand lessens as it becomes cheaper for traders holding other currencies. Gold has traditionally been used as a safe-haven asset against rising inflation. Investor sentiments are boosted by the fact that gold and silver are alternate sources of good investment in the face of declining dollar and rising energy prices and vice versa.

At the currency markets on Thursday, the U.S. dollar extended its losses against most major currencies, losing more ground after downbeat U.S. economic data exacerbated a sell-off linked to rebounding oil prices. The dollar index, which measures the greenback against a trade-weighted basket of currencies, was at 76.06, down from 76.926 in previous session.

Among economic news hitting the wires at US today, initial jobless claims for the week ending 16 August totaled 432,000, which was below the 440,000 expected. Claims fell 13,000 relative to the prior week's downwardly revised total. Still, the 4-week moving average for jobless claims advanced to 445,750 from 438,500.

Also, the Conference Board in USA reported today that the leading economic indicators for July dipped 0.7%. The leading index is designed to forecast turning points in the economy. Market was looking for a 0.2% decline. The report pointed to slow growth the rest of the year and possibly an economy grinding to a halt.

At the crude market on Thursday, crude oil rose as much as 6.1% on speculation rising tensions between the U.S. and Russia may disrupt supply. Prices also rose due to the strong dollar. Crude oil for October delivery rose $5.62 (4.9%) to settle at $121.18 a barrel.

Earlier this year, the weakening dollar and higher global demand for raw materials had led to records this year for commodities including gold. Gold reached a record in March as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. The Federal Reserve halted cuts to its target bank lending rate in April, after slicing it in seven steps to 2% from 5.25% in September.

Gold had witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. Silver had climbed 16% in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.

At the MCX, gold prices for October delivery closed higher by Rs 254 (2.2%) at Rs 11,823 per 10 grams. Prices rose to a high of Rs 11,865 per 10 grams and fell to a low of Rs 11,600 per 10 grams during the day’s trading.

At the MCX, silver prices for September delivery closed Rs 769 (3.9%) higher at Rs 20,441/Kg. Prices opened at Rs 19,820/kg and rose to a high of Rs 20,549/Kg during the day’s trading.

Crude’s sudden more than $5 gain

Prices perk up as tensions between Georgia and Russia continue

Crude oil prices registered substantial rise on Thursday, 21 August, 2008 as tensions between Russia and Georgia continued. Prices also rose the dollar weakened against its rivals. At the end, prices gave up some its gains but still ended substantially higher.

Crude-oil futures for light sweet crude for October delivery closed at $121.18/barrel (higher by $5.62 or 4.9%) on the New York Mercantile Exchange. Earlier, it rose by more than 6%. Last week, crude prices ended lower by 1.2%. Before that crude lost $15.92 (11%) in July, 2008, the biggest ever in dollars. Prices are 74% higher than a year ago. Prices reached a high of $147 on 11 July but have dropped 16% since then.

At the currency markets on Thursday, the U.S. dollar extended its losses against most major currencies, losing more ground after downbeat U.S. economic data exacerbated a sell-off linked to rebounding oil prices. The dollar index, which measures the greenback against a trade-weighted basket of currencies, was at 76.06, down from 76.926 in previous session.

The signing of a missile-shield agreement between the U.S. and Poland yesterday bolstered concern that Russia may disrupt the flow of oil. The oil market has been concerned about oil supplies in the region. Russia is the world's second-largest oil producer after Saudi Arabia, and the Caspian Sea is a major route for oil shipment.

In a monthly oil report issued last week, the Organization of the Petroleum Exporting Countries (OPEC) said that oil demand has been "badly hurt" this summer by the slowing economy and high oil prices. Transport and industrial fuels declined the most, sending USA’s total oil demand down by 3.8%, or 0.8 million barrels per day in the first seven months of the year.

Crude prices had gained 38% in the second quarter of this year. It was the biggest quarterly increase in nine years. It ended June 2008 higher by 9.9%. For the year, crude is up by 17% till date.

Brent crude oil for October settlement rose $5.8 (5.1%) o close at $120.16 a barrel.

Against this background, September reformulated gasoline rose by 13.5 cents to close at $3.0452 a gallon, and September heating oil gained 13.1 cents to end at $3.3006 a gallon.

Natural gas in New York advanced as crude oil surged more than $5 a barrel and utilities and factories bought the fuel after prices fell to a six-month low. Natural gas for September delivery rose 17.5 cents (2.2%) to settle at $8.252 per million British thermal units.

At the MCX, crude oil for September delivery closed at Rs 5,255/barrel, higher by Rs 275 (5.5%) against previous day’s close. Natural gas for September delivery closed at Rs 363.1/mmbtu, higher by Rs 5.1/mmbtu (1.4%)

Market seen under pressure on surge in inflation, crude rally

Local benchmark indices are headed for a weak start today, 22 August 2008 weighed by fears of further monetary tightening by the Reserve Bank of India after inflation hit a fresh 16-year high. A rally in crude oil prices may weigh on the sentiment further. Global cues were mixed.

Inflation data, announced after market hours yesterday, 21 August 2008, showed wholesale prices index rose 12.63% in the week ended 9 August 2008, up from the previous week's 12.44%.

Light, sweet crude for September delivery surged $5.62 to $121.18 a barrel yesterday, 21 August 2008 on the New York Mercantile Exchange (NYMEX) on weaker US dollar and worries about tightening output from OPEC countries.

Asian markets slipped to a two-year low today, 22 August 2008. China's Shanghai Composite slipped 1.37% or 33.31 points at 2,398.39, Japan's Nikkei was down 0.67% or 85.50 points at 12,666.71, Taiwan's Taiwan Weighted fell 0.86% or 59.33 points at 6,859.15, and South Korea's Seoul Composite plunged 2.19% or 33.16 points at 1,479.43.

US stocks finished mixed on Thursday, 21 August 2008, after investors largely shrugged off a jump in oil prices and focused instead on a bullish call on Lehman Brothers Holdings that eased worries about the financial sector. The Dow Jones industrial average gained 12.78 points, or 0.11%, to 11,430.21. The S&P 500 index advanced 3.18 points, or 0.25%, to 1,277.72, and the Nasdaq Composite index slipped 8.70 points, or 0.36%, to 2,380.38.

Back home, the BSE 30-share Sensex lost 434.50 points or 2.96% to 14,243.73 and the S&P CNX Nifty fell 131.90 points or 2.99% to 4,283.85, yesterday 21 August 2008.

The barometer index is down 6,043.26 points or 29.78% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 6,963.04 points or 32.83% away from its all-time high of 21,206.77 struck on 10 January 2008.

Foreign institutional investors (FIIs) were net equity sellers worth Rs 545.71 crore while mutual funds purchased shares worth Rs 344.89 crore on Thursday, 21 August 2008, according to provisional data on NSE.

FIIs were net buyers of Rs 561.73 crore in the futures & options segment on Thursday, 21 August 2008. They were net buyers of index futures to the tune of Rs 1176.72 crore and purchased index options worth Rs 631.35 crore. They were net sellers of stock futures to the tune of Rs 9.37 crore and bought stock options worth Rs 6.99 crore.

Morning Call - Aug 22 2008

Market Grape Wine :

In House:

Nifty at a support of 4240 and 4180 with resistance at 4350 and 4415 levels.

Cash: Sell REL INFRA target 910 with S/L 975.

Cash: Buy SBIN target 1360 with S/L 1295.

Future: Buy ABB above 880 target 905 with S/L 871

Future: Sell BPCL below 301 targets 285 with S/L 310.

Out House:

Markets at a support of 14041 & 13883 and resistance at 14523 & 14786 levels .

Buy : Infy at dips

Buy : LNT at dips

Buy : Coreproject

Buy : IBullReal at dips

Buy : HP at dips

Buy : NeyvelliLig & NTPC

Buy : Aftek at dips

Buy : SBIN at dips

Buy : Relcap

Dark Horse : RelCap , RIL , Core , NTPC , HP , Infy , & M&M

TGIF : Thank God Its Friday : Markets to remain choppy and volatile maintain strict stop loss for your trades .

Parsvnath Developers

Parsvnath Developers

Bears going for the kill

Bears seem to be moving in for the kill, aware that the micro as well as macro conditions are in their favour. A low profile market operator — famed for his bearish calls, and known to have made a killing in the past few months — is said to have built significant short positions, convinced that the market is set to breach its July lows shortly. Given the absence of any positive triggers on the horizon, traders with long positions in the derivatives segment do not have any incentive to carry forward their positions. On the macro front, inflation climbed to a fresh 16-year high of 12.63%, raising concerns that interest rates may be hiked further. Globally, the situation is even more gloomy, as experts feel that the worst of the sub-prime crisis is yet to unfold.

Given these factors, market watchers expect another round of sell-off in the next few days. Many brokers feel this bout of selling could be far more painful than the ones seen so far.

On Thursday, the 30-share Sensex plummeted 434.50 points or nearly 3% to close at 14243.73, with sellers targeting banking and real estate shares. The 50-share Nifty shed 131.90 points to close at 4283.85. Dealers attributed the steep fall in real estate and banking shares to the build-up of long positions recently, as many traders felt that the worst for these sectors was over. But with inflation still mounting, it appears that RBI will have to announce further liquidity tightening measures.

“We are likely to see a sideways movement for the next one year at least,” says Edelweiss Capital chairman and managing director Rashesh Shah, adding that the next 3-4 months could be tough.

“There are no positive triggers in sight. Inflation and crude oil prices are still not under control, and corporate earnings are set to plateau over the next couple of quarters,” he added.

Thursday’s decline was not backed by strong volumes. Market watchers say this is an indication that the market may not have bottomed out yet. Traded turnover on both exchanges combined was around Rs 65,000 crore. ICICI Bank, HDFC Bank and State Bank of India were among the worst-performing frontline shares, falling between 5% and 7%. Technology shares too were not spared, despite the fact that the rupee is likely to stay weak against the dollar. TCS, Wipro and Infosys were down between 2% and 3%.

via Economic Times