Pre Session Commentary - May 21 2009

Today domestic markets are likely to open negative amidst weak global cues. The US markets closed in red due to FOMC’s outlook of the economy which shows contraction in the real GDP during the current fiscal along with trough path for the housing sector. The bottom-line stocks may once again steel the charm of the day form the heavy weights. Further the UPA government formation to go with the swearing tomorrow would hardly affect the market sentiments today as traders are cautious in taking fresh positions.

On Wednesday, the domestic markets closed in red. The session started with a timid trade amidst lack of any cues from other Asian markets which were trading mixed. As the trading session progressed the markets started plunging in red exuding profit booking and cautiousness. A firm trend in London Metal Exchange (LME) thrust local market indices like CD, Metal and Auto that closed with huge gains of 9.69%, 5.22% and 4.70% respectively. On the other hand Bankex, Oil & Gas and Teck suffered losses of 2.45%, 2.09% and 1.33% respectively. The bottom line stocks for the second consecutive day outshined the benchmark indices by clocking remarkable gains of 6.03% and 8.86% respectively. We expect the markets to be trading negative.

The BSE Sensex closed low by 241.37 points at 14,060.66 and NSE Nifty ended with loss of 48.15 points at 4,270.30. BSE Mid Caps and Small Caps closed with gains of 265.95 points and 424.04 points at 4,673.77 and 5,208.18 respectively. The BSE Sensex touched intraday high of 14,405.51 and intraday low of 13,976.49.

On Wednesday, the US stock markets closed in red. The fragile outlook of the FOMC meeting suggested that the real GDP will face a contraction this year. The housing sector is also facing a trough situation amidst the downturn in economy. Sectors like financial and consumer finance companies were shattered during the day’s trade. Though Bank of America exuded some strength after announcing that it has raised $13.5 billion through share offering, the banking stocks could not resist the selling pressure. Consumer finance companies were under huge pressure after the Senate’s approval and House of Representatives approved a bill to make stringent changes for the credit card industry. Dow Component Hewlett Packard generated in-line earnings for the last quarter and has a upside outlook for the current fiscal. However the stock ended with a loss of 0.7%. The US light crude oil futures for July closed higher by 3.3% at $62.01 per barrel on the New York Mercantile Exchange.

The Dow Jones Industrial Average (DJIA) declined by 52.81 points to close at 8,422.04. The NASDAQ Composite (RIXF) index fell by 6.70 points to close at 1,727.84 and the S&P 500 (SPX) closed low by 4.66 points at 903.47.

Today major stock markets in Asia are trading negative. Hang Seng is trading low by 208.16 points at 17,267.68 followed by Shanghai Composite which is low by 29.97 points at 2,621.44. Japan''s Nikkei is low by 123.06 points at 9,221.58, Strait Times is low by 19.59 points at 2,249.65. Seoul Composite fell by 17.78 points at 1,417.92 respectively.

Indian ADRs ended mostly lower. In technology sector, Infosys ended down by 2.45% along with Wipro by 0.72%. Further, Satyam lost 0.44% while Patni Computers gained 2.27%. In banking sector ICICI Bank and HDFC Bank dropped by 2.77% and 1.63% respectively. In telecommunication sector Tata Communication decreased by 0.57% whereas MTNL advanced by 3.20%. Sterlite Industries increased by 1.52%.

The FIIs on Wednesday stood as net buyers in equity and debt. Gross equity purchased stood at Rs 12,578.90 Crore and gross debt purchased stood at Rs 44.40 Crore, while the gross equity sold stood at Rs 7,534.10 Crore and gross debt sold stood at Rs. 28.80 Crore. Therefore, the net investment of equity and debt reported were Rs 5,044.80 Crore and Rs 15.70 Crore respectively.

On Wednesday, the partially convertible rupee ended at 47.47/48 per dollar, 0.6 percent stronger than previous close at 47.75/77. Rupee continued gaining strength for the fourth consecutive day due to anticipations of more foreign capital inflow as the UPA government is expected to sworn in on May 22, 2009.

On BSE, total number of shares traded were 81.15 Crore and total turnover stood at Rs 8,415.09 Crore. On NSE, total number of shares traded was 159.89 Crore and total turnover was Rs 28,398.75 Crore.

Top traded volumes on NSE Nifty – Unitech with 108221028 shares, Suzlon Energy with 59918605 shares, DLF 27738945 shares, Reliance Comm with 26408897 shares followed by Tata Steel with 24893214 shares.

On NSE Future and Options, total number of contracts traded in index futures was 813193 with a total turnover of Rs 16,919.57 Crore. Along with this total number of contracts traded in stock futures were 529735 with a total turnover of Rs 26,987.93 Crore. Total numbers of contracts for index options were 1189773 with a total turnover of Rs 25,002 Crore and total numbers of contracts for stock options were 32442 and notional turnover was Rs 1,661.38 Crore.

Today, Nifty would have a support at 4,189 and resistance at 4,245 and BSE Sensex has support at 13,650 and resistance at 13,920.