Pre Session Commentary - July 28 2009

Today domestic markets are likely to open negative due to cautiousness ahead of RBI’s monetary policy to be announced today. US markets closed flat yesterday and therefore majority of Asian markets have also opened in a subdued note. Any surprise or disappointment from RBI’s quarterly policy review can hit hard on the market sentiments. One may witness a lot of cautiousness prevailing across the broader level before the monetary policy review and rate sensitive sectors could be the cheer leaders of the day.

On Monday, domestic markets closed flat after a range bound session. Investors took calculative steps ahead of F&O expiry on 30th July 2009 and RBI’s quarterly policy review tomorrow. Earlier during initial trading, market exhibited gains on positive global cues as Asian market ended in with good gains and European markets were in green. However rally was short lived and selling pressure dragged the domestic bourses lower on the first trading day of the week. Meanwhile, sharp drop in revenues of Reliance Industries due to lower refinery margins had contributed to the selling pressure to some extent. From the sectoral front FMCG, Realty, Power and Metal led the markets with gains of 3.64%, 3.11%, 2.29% and 1.93% respectively. There was phenomenal bottom fishing as BSE Mid Cap and Small Cap index gained by 1.63% and 1.53% respectively. Domestic markets are likely to trade range bound today.

The BSE Sensex closed flat at 15,375.04 and NSE Nifty also ended flat at 4,572.30. BSE Mid Caps and Small Caps closed up by 87.69 points and 92.54 points at 5,469.50 and 6,142.74 respectively. The BSE Sensex touched intraday high of 15,463.09 and intraday low of 15,228.46.

On Monday, the US stock markets closed flat. The banking stocks were in the limelight and provided a lot of support and leadership in the market. Many stocks opened with losses during the early trading hours; however news of new home sales data helped stocks record respectable gains. The new home sales during June inclined by 11 per cent to record a better-than-expected annualized rate of 384,000. With new home sales coming in at their highest rate since November, the supply of unsold homes moved lower to 8.8 months from 10.2 months in May. In the banking space The Wall Street Journal stated that second quarter lending was down nearly 3 per cent among 15 large U.S. banks suggested that many banks remain cautious about putting their money to work. In the macro economic scenario Bernanke stated that the jobless rate will remain high even after the U.S. exits recession. US light crude oil futures for September delivery closed at $68.32 per barrel up by 0.4% on the New York Mercantile Exchange.

The Dow Jones Industrial Average (DJIA) closed higher by 15.27 points at 9,108.51, NASDAQ index inclined by 1.93 points to 1,967.89 and the S&P 500 (SPX) closed up by 2.92 points at 982.18.

Today major stock markets in Asia are trading mixed. Hang Seng is up by 119.03 points at 20,370.65. Shanghai Composite is low by 11.573 points at 3,423.639. Japan''s Nikkei is trading down by 37.25 points at 10,051.41. Strait Times is up by 18.78 points at 2,595.44.

Indian ADRs ended mixed on Monday. However, gainers outnumbered the losers. In the IT space, Satyam Computers was up 3.9%, Infosys was up 0.12%, Wipro was up 0.57%, while Patni Computers was down 1.58%. In the telecom space, MTNL was up 6.91% while Tata Communication was down 0.63%. In the banking space, ICICI Bank was down 0.73% and HDFC Bank was down 1.9%. In other sectors, Tata Motors was up 3.76%, Dr Reddy''s Labs was up 1.02% and Sterlite Industries was up 0.38%.

The FIIs on Monday stood as net buyers in equity and net sellers in debt. Gross equity purchased stood at Rs 3,263.90 Crore, while the gross equity sold stood at Rs 2,213.20 Crore and gross debt purchased stood at Rs 242.10 Crore, while gross debt sold stood at Rs 457.90 Crore. The net investment of equity reported was Rs 1,050.60 Crore and net debt was Rs (215.80) Crore.

On Monday, the partially convertible rupee ended at Rs 48.16/17, 0.1% stronger than its previous close at 48.22/23. The rupee gained strength despite lack of direction from the local domestic stock markets and also month end dollar demand from importers.

On BSE, total number of shares traded were 43.63 Crore and total turnover stood at Rs 6,063.49 Crore. On NSE, total number of shares traded were 95.23 Crore and total turnover was Rs 19,164.1 Crore.

Top traded volumes on NSE Nifty – Suzlon Energy with total volume traded 59873665 shares, followed by Unitech with 50732864, DLF with 21199776, Tata Steel with 12102620 and HUL with 11347035 shares.

On NSE Future and Options, total number of contracts traded in index futures was 474417 with a total turnover of Rs 10,471.27 Crore. Along with this total number of contracts traded in stock futures were 623987 with a total turnover of Rs 19,245.66 crore. Total numbers of contracts for index options were 842623 with a total turnover of Rs 19,164.38 Crore and total numbers of contracts for stock options were 50988 and notional turnover was Rs 1,606.88 Crore.

Today, Nifty would have a support at 4,510 and resistance at 4,634 and BSE Sensex has support at 15,145 and resistance at 15,568.