Pre Session Commentary - Oct 27 2009

Today domestic markets are likely to open negative amid weak trade in Asian Market, weak start in SGX Nifty as well and huge sell-of in US Market overnight. The trade would be highly volatile with negative bias. One could expect stock specific and sector specific movement along the curve on the back of RBI monitory policy which is expected to loosen the CRR. Defensive sector will be benefited in choppy session. Today domestic market is likely to trade range bound with negative bias.

On Monday, Indian market closed in negative terrain after a hunk of volatile session. The profit booking snatched market strength in the last few minutes of trading. The investors remained cautious ahead of the RBI’s announcement of monetary policy review on October 27. The Apex bank is likely to keep interest rates unchanged. The RBI in he recnt past has injected huge amount of money in to the banking system to boost the liquidity as well as to revive the economy from the Global financial crisis. So there are speculations in the market that RBI may exit from the loose monetary policy. This led the investors to stay away from the interest rate sensitive indices like Bankex and Realty, which were the major laggards during the trading session. Further the investors remained cautious ahead of the November F&O expiry later this week. The markets also shrugged off the positive global markets. Realty (4.59%), Consumer Durables (2.38%), Banking (1.64%) and Oil&Gas (1.51%) stocks were under pressure while selective sectors as FMCG (0.891%) and Health Care (0.87%) were the gainers from the Index pack. The Market breadth, indicating the overall strength of the market, was weak.

The BSE Sensex closed lower by 70.31 points or 0.42% at 16,740.50 and NSE Nifty closed down by 26.15 points or 0.52% at 4,970.90. BSE Mid Caps and BSE Small Caps closed with loss of 117.17 points and 100.48 points at 7,573.02 and 8,791.18 respectively. The BSE Sensex touched intraday high of 16,938.88 and intraday low of 16,706.08.

The US markets closed weak on Monday as stocks dragged, sellers stepped out and undercut the early going gains. That caused bourses to plunge sharply and frittered the rest of the afternoon trading in negative territory. A stronger dollar also weighed on the sentiments. Result from Monsanto dragged the material stocks. Financial stocks were also in negative terrain on the back of downgrade by Rochdale of regional lenders Fifth Third and Sun Trust. Instead off broad based weakness in the equity markets, Treasuries suffered. The benchmark 10-year Note slipped around 18 ticks, which took its yield above 3.5% for the first time since August. Its weakness appeared to worsen amid better-than-average results for an auction of 5-year TIPS. All the major sectors finished the session down mainly from Financials (2.5%), Materials (2.5%), Energy (1.5%) and Telecom (1.3%). US light crude oil futures for December delivery closed down by 2.3% at $78.63 per barrel, on the New York Mercantile Exchange.

The Dow Jones Industrial Average (DJIA) ended with loss of 104.22 points at 9,867.96. NASDAQ index slipped 12.62 points to 2,141.85 and the S&P 500 (SPX) closed lower by 12.65 points at 1,066.95.

Indian ADRs ended mixed on Monday. However, losers outnumbered the gainers. In the IT space, Satyam Computers was down 9.11%, Infosys was down 0.7%, Wipro was down 0.69% while Patni Computers was up 2.63%. In the banking space, ICICI Bank was down 3.31% and HDFC Bank was down 1.61%. In the telecom space, MTNL was down 0.9% while Tata Communication was up 0.25%. In other sectors, Sterlite Industries was down 1.71% while Dr Reddy''s Labs was up 2.45% and Tata Motors was up 4.45%.

The FIIs on Monday stood as net seller in equity whereas net buyer in debt. Gross equity purchased stood at Rs. 2,942.40 crore and gross debt purchased stood at Rs. 665.00 crore, while the gross equity sold stood at Rs. 2,991.10 crore and gross debt sold stood at Rs. 331.00 crore. Therefore, the net investment of equity and debt reported were (Rs. 48.80) crore and Rs. 334.00 crore respectively.

On Monday, the partially convertible rupee ended at 46.64/65 per dollar, 0.3% weaker than previous closing at 46.50/51 per dollar on concern over the outcome of Central Bank’s rate decision today and continued dampening equity market, raising concerns whether this year’s robust capital inflows could be sustained.

On BSE, total number of shares traded were 35.81 crore and total turnover stood at Rs. 4,978.15 crore. On NSE, total number of shares traded were 71.64 crore and total turnover was Rs. 15,714.37 crore.

Top traded volumes on NSE Nifty – Unitech with total volume traded 46726091 shares, followed by Suzlon Energy with 17065252, Jaiprakash Associates with 13241387, DLF with 10922260 and Idea Cellular with 8709355 shares.

On NSE Future and Options, total number of contracts traded in index futures was 690796 with a total turnover of Rs. 16,956.34 crore. Along with this total number of contracts traded in stock futures were 808004 with a total turnover of Rs. 27,330.89 crore. Total numbers of contracts for index options were 1531616 with a total turnover of Rs. 38,602.28 crore and total numbers of contracts for stock options were 70230 and notional turnover was Rs. 2,394.21 crore.

Today, Nifty would have a support at 4,931 and resistance at 4,982 and BSE Sensex has support at 16,594 and resistance at 16,792.