Sensex to start softer on nervous world markets

Looks like the bulls may have to settle down a bit. On a day when the world markets were a bit skittish India managed to outperform. The breadth was positive, partly thanks to persistent surge in Small Caps. Turnover was also good. Most of the buying came from local funds even as FIIs were net sellers. The momentum in Small Caps is being driven by retail investors.





The big question is can this rally sustain? At least today we expect some softening due to fresh weakness in global markets. US and European markets fell amid renewed concerns over the health of the eurozone banks. Asian markets are also down this morning.

There are reports that Europe’s much hyped “stress tests” weren’t tough enough and that the strength of region’s financial system remains suspect. And, if the advance in the yen and gold are any indication risk aversion is still high.

Global factors and events will continue to drive the local sentiment, apart from liquidity. The near-term trading range on the Nifty is 5400-5700. The market will meet resistance around 5650 and around 5680 before hitting 5700. Near-term support is likely at around 5550.

Bank of Canada will take a call on rates tomorrow. The Bank of England will review its policy on Thursday.

The RBI meets on Sept. 16 to review its policy rates. The latest IIP data will be out on Sept. 10 and August inflation on Sept. 14.

IT firms could be in action again amid reports that the state of Ohio has banned outsourcing of government contracts. Sun Pharma is the stock to watch out for as the Supreme Court of Israel has announced a favourable verdict in the case against Taro Pharma. Oil PSUs might also gain amid reports that the Government has increased petrol and diesel prices by a few paise.

FIIs were net sellers of Rs208.8mn in the cash segment on Tuesday (provisionally), according to the NSE web site. Local funds were net buyers of Rs4.41bn. In the F&O segment, the foreign funds were net buyers at Rs22.16bn. FIIs were net buyers of Rs10.39bn in the cash segment on Monday, as per SEBI's web site. Mutual funds were net buyers of Rs3.54bn on the same day.

Important News Snippets For The Day:
Petrol and diesel prices across the country will increase by 913 paise a litre with effect from Tuesday midnight, after the government decided to increase the commission to petrol pump dealers.

Maruti Suzuki plans to invest around Rs19.25bn for setting up a third plant at its second facility in Manesar.

Tata Steel is looking for a buyer for its South African unit after agreeing to sell its Teesside operations in the UK.

JSW Steel's crude steel production in August increased 3% to 539,000 tonnes against the 521,000 tonnes logged in the same period last year.
BHEL plans to leverage its balance sheet and reserves to set up an equipment financing arm through a JV.

HDFC has relaunched its teaser home loan scheme, while SBI may extend its own.

SBI plans to raise Rs5bn via sale of retail bonds.

Wipro expects higher US visa costs to have a moderate impact on its operating margins in the current financial year.

Adani Power is expected to gain up to Rs10mn/day as the Finance Ministry has reduced Customs duty on electricity generated and supplied from an SEZ into a Domestic Tariff Area (DTA).

Ashok Leyland said it plans to raise up to6bn in longterm debt this fiscal to fund its capital expenditure plans till 2011-12.

Essar Oil, may start supplying gas to the Durgapur facility of Phillips Carbon Black from its Ranigunj (East) CBM block, beginning October.

SpiceJet has announced the commencement of its international operations, with its first flights to Kathmandu and Colombo ready to take off in four weeks.
KEC International has signed a definitive agreement to acquire Texasbased SAE Towers Holdings for US$95mn.

Neyveli Lignite is hoping to take part in the ultra mega power project (UMPP) that is to come up at Cheyyur in Tamil Nadu. Shipping Corporation of India plans to purchase a stake in a shipyard to diversify its business.

Telecom operators in the country added 17 million subscribers in July this year, taking the total number of mobile users in the country to 652.4 mn.

The country’s tea exports fell by nearly 20% to Rs2.1bn in July.

The Government on Tuesday exuded confidence that the new company law will be enacted by the end of this fiscal.