Derivatives expiry may keep market volatile; inflation data eyed

Key benchmark indices are likely to open flat to positive on mixed cues from global shores. The SGX Nifty futures for February 2009 series was up 8 points in Singapore. However expiry of F&O contracts for February 2009 series today, 26 February 2009 will keep market volatile. Also inflation data for the week ended 14 February 2009 to be released by noon today will be closely watched.

Volatility is also likely to remain high ahead of the February series F&O expiry today, 26 February 2009. As per reports, rollover of Nifty positions from February 2009 series to March 2009 series stood at 62% while marketwide rollover of positions was 57%, as on Wednesday, 25 February 2009.

There are expectations that the Reserve Bank of India (RBI) will cut interest rates further to support faltering growth. A sharp fall in inflation to 13-month low in the week ended 7 February 2009, raised speculation of the central bank having more room to cut rates.

Most Asian markets were trading higher today, 26 February 2009, as investors bet government "stress tests" of U.S. banks will bring the ailing industry closer to a fix, while the dollar extended its rally against the yen.

Key benchmark indices in Taiwan, South Korea, Japan and Singapore were up by between 0.36% and 0.87%. However indices in China and Hong Kong fell 0.32% and 1.53% respectively.

US markets fell on Wednesday, 24 February 2009 after President Barack Obama warned of stricter oversight for Wall Street. Also, dividend cuts triggered a sell-off in insurers and an unexpected drop in home sales dragged down industrial shares, overshadowing speculation that banks will pass the government's so-called stress tests.

The Dow Jones Industrial Average lost 80.05 points or 1.1% at 7,270.89. The S&P 500 Index shed 8.24 points or 1.1% to 764.90 while the Nasdaq Composite index fell 16.40 points or 1.1% to 1,425.43.

Median home prices in the U.S. fell 9.5% in 2008, according to the National Association of Realtors, though many big cities like Los Angeles, Las Vegas and Miami showed far larger declines. For all of 2008, GDP rose 1.3%, which was the smallest increase since 2001. In the fourth quarter, GDP fell 3.8%, the biggest contraction since 1982. The unemployment rate last month surged to 7.6%, the highest in more than 16 years. It was 5.8% last year, the highest since 2003.

Meanwhile the House of Representatives has approved a $410 billion bill on Wednesday, 24 February 2009 that boosts spending on domestic programs, bristles with congressional pet projects and chips away at policies left behind by the Bush administration.

Back home, key benchmark indices rose on Wednesday, 24 February 2009, snapping two day's losses, on a third stimulus package for the economy and firm global markets. The BSE 30-share Sensex rose 80.50 points, or 0.91%, to 8,902.56 and the S&P CNX Nifty was up 28.60 points, or 1.05%, to 2,762.50.

According to provisional data on NSE, FIIs were net sellers worth Rs 384.37 crore while mutual funds bought shares worth Rs 367.84 crore on Wednesday, 25 February 2009.

U.S. crude oil rose 25 cents to $42.74 a barrel today, 26 February 2009 after jumping 6% overnight after data showed a larger-than-expected drop in gasoline stocks.