Pre Session Commentary - Feb 25 2009

Today domestic markets are likely to open with a positive gap as the new stimulus package from the UPA government would pump the sentiments of investors. The US markets closed in green and the other Asian markets have also opened with phenomenal gains. Amidst the economic stimulus package, investors are likely to take fresh positions on heavy weights. Banking stocks may bounce back as the RBI is expected to further reduce its key rates like CRR and Repo by 50bps each. One could witness a phenomenal trend today on the back of fiscal stimulus and further RBI rate cut expectations.

On Tuesday, the markets opened with a choppy trade however later managed to pare off its losses and ended flat. The sentiments during the opening session were very weak due to influence of losses in the other Asian markets. However the upward movement was witnessed with phenomenal buying across frontline stocks. The third stimulus package was announced by Pranab Mukherjee which included 2% cut in service tax rates to 10%. The minister also announced that on goods that attract 10% excise duty will now be charged at 8%. However, excise rates on items that attract 8% and 4% excise duty will not be changed. Further the excise duty on bulk cement has been fixed at 8% or Rs 230 per tonne. The customs duty on Naptha will continue beyond March 31, 2009. The abrupt gain across the frontline stocks also witnessed some profit booking therefore Sensex and Nifty closed with marginal losses of 0.24% and 0.09% respectively. The top laggards in the sector indices were Metal, Bankex and PSU that fell by 2.31%, 1.36% and 0.71% respectively. During the session we expect the markets to be trading positive.

The BSE Sensex closed low by 21.15 points at 8,822.06 and NSE Nifty ended flat at 2,733.90. The BSE Mid Caps and Small Caps ended with losses of 49.27 points and 44.48 points at 2,742.45 and 3,116.11 respectively. The BSE Sensex touched intraday high of 8,856.52 and intraday low of 8,619.22.

On Tuesday, the US stock markets closed in green. The day''s rally was due to short covering as the markets had closed low in the prior session. The rally came ahead of President Obama''s national address this evening, followed by Fed Chairman Bernanke''s semiannual testimony to the Senate Banking Committee, which did not provide any further detail regarding government plans to shore up the banking system. Bernanke has further indicated that the outlook for economic activity is uncertain and downside risks probably outweigh those to the upside. He also stated that the recession may end in 2009 and the economy may recover in 2010. US light crude oil for April delivery grew by USD1.52 to settle at $39.96 a barrel on the New York Mercantile Exchange.

The Dow Jones Industrial Average (DJIA) inclined by 236.16 points to close at 7,350.94. The NASDAQ Composite (RIXF) index grew by 54.11 points to close at 1,441.83 and the S&P 500 (SPX) grew by 29.81 points to close at 773.14.

Today major stock markets in Asia are trading in green. Shanghai composite is down by 17.57 points to 2,183.08, Japan''s Nikkei is high by 102.47 points at 7,371.03. Hang Seng is also up by 147.85 points at 12,946.37, South Korea''s Seoul Composite is up by 8.64 points at 1,072.52 and Singapore''s Strait Times is high by 7.33 points to 1,621.77.

Indian ADRs ended mostly higher. In technology sector, Infosys ended up by 4.65% along with Satyam by 2.92%. Further, Wipro ended with increase of 2% while Patni Computers closed down by 1%. In banking sector HDFC Bank and ICICI Bank gained 7.24% and 5.31% respectively. In telecommunication sector, Tata Communication advanced by 5.32% while MTNL dropped by 3.85%. However, Sterlite Industries decreased by 1.05%.

The FIIs on Tuesday stood as net sellers in equity and net buyers in debt. Gross equity purchased stood at Rs 967.50 Crore and gross debt purchased stood at Rs. 25.50 Crore, while the gross equity sold stood at Rs 1139.80 Crore and gross debt sold stood at Rs. 0.00 Crore. Therefore, the net investment of equity and debt reported were Rs (172.20) Crore and Rs 25.50 Crore respectively.

On Tuesday, the Indian rupee closed at 49.87/88, 0.3% weaker than its previous close of 49.72/74. The early crash in the domestic stock markets caused the fall of rupee, however the dollar sales by exporters and state-run banks helped limit the losses.

On BSE, total number of shares traded were 19.30 Crore and total turnover stood at Rs 2,457.09 Crore. On NSE, total number of shares traded were 44.36 Crore and total turnover was Rs 6,947.42 Crore.

Top traded volumes on NSE Nifty – Unitech with 32805138 shares, DLF with 18240745 shares, ICICI Bank with 15551602 shares, Suzlon with total volume traded 14525161 shares followed by SAIL with 10821149 shares.

On NSE Future and Options, total number of contracts traded in index futures was 1078108 with a total turnover of Rs 13,818.83 Crore. Along with this total number of contracts traded in stock futures were 1144000 with a total turnover of Rs 13,335.62 Crore. Total numbers of contracts for index options were 1292727 with a total turnover of Rs 17764.66 Crore and total numbers of contracts for stock options were 64833 and notional turnover was Rs 774.41 Crore.

Today, Nifty would have a support at 2,762 and resistance at 2,793 and BSE Sensex has support at 8,892 and resistance at 8,996.