Pre Market Watch - Sep 11 2008

The Indian Market is expected to have negative opening as Asian markets are trading lower. On Tuesday, domestic markets closed in red zone for second consecutive day due to the profit booking. Markets opened sharply lower as investors were afraid to take fresh positions on weak global cues and concern for inflation number along with IIP data due to be released today. Further market continued to trade weak and slipped sharply during last trading hours to end the day with losses. Weak European markets along with rise in black gold in Asian trade to $104.03 a barrel also fueled to the negative sentiment. NSE Nifty ended around 4,400 mark and BSE Sensex below14,700 level. Mid cap and Small cap stocks also showed weakness. From the sectoral front, all indices closed in red and Metal stocks were major sufferer of negative sentiment as closed with deep cut of more than 5% on reports that the steel ministry has recommended an additional 5% duty on iron ore exports over the present level of 15% in a bid to tame domestic prices of steel. Along with that, Oil & Gas, Capital Goods, Reality, Power and Bank stocks also contributed to the gloomy situation. The BSE Sensex closed lower by 238.15 points at 14,662.61 and NSE Nifty ended down by 68.45 points at 4,400.25. The BSE Mid Caps and Small Caps closed with loss of 69.27 points at 5,708.93 and by 61.19 points at 6,903.42.

We expect that market may remain volatile during the trading session ahead of inflation number for the week ended 30th August 2008 and IIP data.

The core sector data released two days before the IIP data for the month of July with indication of better industrial growth than previous months. The index of six core-industries grew at its fastest speed in July of current fiscal at 4.3%, backed by higher coal production and electricity generation. However, the index number for infrastructure output was much below than the 7.2% growth rate during the same month last year.

On Wednesday, the US market closed with marginal gains after rallying earlier on a drop in oil prices. Investor’s uneasiness was on worries about financial shares like Lehman Brothers. Crude slipped to settle at $102.58 per barrel on the NYMEX. Lehman reported a third quarter loss of $3.9 billion, and is cutting its common stock annual dividend to $0.05 per share from $0.68.

The Dow Jones Industrial Average (DJIA) closed higher by 38.19 points to close at 11,268.92 followed by the NASDAQ index ended up by 18.89 points to close at 2,228.70 and the S&P 500 (SPX) gained 7.53 points to close at 1,232.04.

Indian ADRs ended mixed. In technology sector, Patni Computers ended higher by (2.57%) followed by Satyam advanced by (1.92%), Infosys ended up by (1.13%), while Wipro lost (0.18%). In banking sector ICICI Bank and HDFC Bank gained (3.08%) and (1.98%). In telecommunication sector, MTNL and Tata Communication rose (0.69%) and (0.57%). However, Sterlite industries decreased by (1.34%).

Today the major stock markets in Asia are trading lower. Hang Seng index is trading weaker by 324.37 points at 19,675.41 along with Japan’s Nikkei trading down by 149.74 points at 12,196.89, Taiwan Weighted plunged 114.66 points at 6,343.35 and Singapore''s Straits Times declined 36.91 points at 2,585.50.

The FIIs on Wednesday stood as net seller in equity and net buyer in debt. Gross equity purchased stood at Rs2,023.10 Crore and gross debt purchased stood at Rs271.70 Crore while the gross equity sold stood at Rs2,209.20 Crore and gross debt sold stood at Rs119.10 Crore. Therefore, the net investment of equity reported was (Rs186.20) Crore and net debt was Rs152.60 Crore.

The Indian rupee on Wednesday weakened and crossed the level of Rs45 per dollar for the first time since November 2006 due to the strong dollar demand from foreign banks and stock market losses that raised expectations of more foreign fund outflows. The partially convertible rupee ended at 45.10/11 per dollar, 0.62% weaker than Tuesday''s close of 44.84/85.

Today, Nifty has support at 4,302 and resistance at 4,491 and BSE Sensex has support at 14,350 and resistance at 14,993.