Pre Session Commentary - May 22 2009

Today domestic markets are likely to open negative on the back of news about weak global economic outlook. S&P have downgraded the UK economy and hence the UK bonds due to concerns about the net deficit to climb as much as 100% of the GDP. The US jobless data has once again jolted the US markets and hence repercussions are indispensable across the Asian markets. Despite weak global cues the buying sentiments in the domestic arena may be supported by the fact that the UPA government is swearing today with its new cabinet.

On Thursday, the domestic markets closed in red. After a subdued opening the domestic markets could not gather strength to fling the hurdle. The negative cues strangled the domestic sentiments till the end. The news about weak economic outlook of the US by FOMC started the carnage which afflicted across the Asian and European markets. CG, Bankex, and Auto were the laggards for the day as they lost 5.41%, 2.91% and 2.07% respectively. The WPI inflation data for the week ended 9th May 2009 surged at 0.61% as against 0.48% recorded in the previous week. Small cap stocks snatched the charm of the day against Mid Cap and other benchmark indices. We expect the markets to be trading volatile.

The BSE Sensex closed low by 324.12 points at 13,736.54 and NSE Nifty ended with loss of 59.40 points at 4,210.90. BSE Mid Caps ended flat at 4,673.87, whereas Small Caps closed with phenomenal gains of 134.35 points at 5,342.53 respectively. The BSE Sensex touched intraday high of 14,089.51 and intraday low of 13,704.43.

On Thursday, the US stock markets closed in red. Worse-than-expected jobless claims reiterated the fact that economic conditions of US is still worsening. Initial claims for the week ended May 16 inclined by 631,000 to pile up the continuing claims climbed to a new record of 6.66 million. The Fed had yesterday pointed out the economic worry of US and sooner than later Standard & Poor has down graded the UK economy by lowering the rating of the government’s bonds on deep concerns of the net deficit which is expected to reach 100% of the GDP. The macro economic outlook of the world looks murky and therefore sentiments across the global market are weak. The US light crude oil futures for July closed lower by 1.6% at $61.02 per barrel on the New York Mercantile Exchange.

The Dow Jones Industrial Average (DJIA) declined by 129.91 points to close at 8,292.13. The NASDAQ Composite (RIXF) index fell by 32.59 points to close at 1,695.25 and the S&P 500 (SPX) closed low by 15.14 points at 888.33.

Today major stock markets in Asia are trading negative. Hang Seng is trading low by 84.54 points at 17,114.95 followed by Shanghai Composite which is low by 3.89 points at 2,606.73. Japan''s Nikkei is low by 7.11 points at 9,257.04, Strait Times is up by 0.77 points at 2,211.74. Seoul Composite is up by 3.65 points at 1,425.30 respectively.

Indian ADRs ended down. In technology sector, Infosys ended lower by 2.11% along with Wipro by 1.90%. Further, Satyam lost 1.54% while Patni Computers gained 0.11%. In banking sector ICICI Bank and HDFC Bank dropped by 1.30% and 0.50% respectively. In telecommunication sector Tata Communication decreased by 4.74% whereas MTNL advanced by 8.17%. Sterlite Industries decreased by 5.11%.

The FIIs on Thursday stood as net sellers in equity and net buyers in debt. Gross equity purchased stood at Rs 6,399.50 Crore and gross debt purchased stood at Rs 293.50 Crore, while the gross equity sold stood at Rs 6,633.70 Crore and gross debt sold stood at Rs. 192.20 Crore. Therefore, the net investment of equity and debt reported were Rs (234.10) Crore and Rs 101.30 Crore respectively.

On Thursday, the partially convertible rupee ended at 47.37/38 per dollar, 0.21 percent stronger than previous close at 47.47/48. Rupee gained strength for the fifth consecutive day on the back of huge dollar inflow through FII investment in local stock markets and also the dollar selling by exporters. However on the other hand the importers started buying dollars which prevented further gain in rupee against the green back.

On BSE, total number of shares traded were 81.06 Crore and total turnover stood at Rs 7,996.10 Crore. On NSE, total number of shares traded was 152.15 Crore and total turnover was Rs 24,334.89 Crore.

Top traded volumes on NSE Nifty – Unitech with 67370184 shares, Suzlon Energy with 43560221 shares, Reliance Comm with 23050372 shares, DLF with 20549662 followed by Tata Steel with 18097895 shares.

On NSE Future and Options, total number of contracts traded in index futures was 811479 with a total turnover of Rs 16,783.11 Crore. Along with this total number of contracts traded in stock futures were 528611 with a total turnover of Rs 27,271.48 Crore. Total numbers of contracts for index options were 1203927 with a total turnover of Rs 25,803.99 Crore and total numbers of contracts for stock options were 36004 and notional turnover was Rs 1,843.51 Crore.

Today, Nifty would have a support at 4,145 and resistance at 4,285 and BSE Sensex has support at 13,565 and resistance at 13,845.