Oct 10, 2008

Markets likely to open gap down following weak global cues & retest the July 2008 lows

18 Sep 2008 | 09:58
Markets likely to open gap down following weak global cues & retest the July 2008 lows

The Indian Markets cracked down once again on Wednesday to close on a weak note. The BSE Sensex closed at 13262.9, down by 1.9% over Tuesday’s close.
After opening on a flat note, the Nifty started drifting down in the early hour of trade. It tried to recover during the day, but post noon once again witnessed huge selling pressure & corrected sharply to make an intra-day low of 3974.6 before closing at 4008.3, down by 1.6% over Tuesday’s close.
The NSE cash turnover stood at Rs. 12278 crores in comparison to Rs. 12316 crores on Tuesday. The market breadth continued to remain poor on BSE with the advance-decline ratio of 1:2. All the sectoral indices ended in the red with Realty, Banks & Metals being the major losers, which fell by 4.1%, 3.8% & 3.6% respectively.

U.S. stocks dropped to a three-year low on Wednesday as the U.S. rescue of insurer AIG failed to calm a crisis of confidence in global markets and banks were scared to lend to each other. Dow Jones & Nasdaq both closed down deep in the red by 4.1% & 4.9% respectively. The Indian ADRs ended sharply lower with Infosys, Wipro & Satyam decreasing by 5.6%, 5.3% & 6.6% respectively. ICICI & HDFC Bank closed down by 7.7% & 5.3% respectively.
Among the Latin American markets, the Mexican markets fell by 4.7%, while the Brazilian markets decreased by 6.7%. Among the Metal prices, Aluminium, Zinc & Nickel decreased by 0.3%, 0.6% & 0.6% respectively, while Copper increased by 1.4%. The light crude oil for October increased by 6.6% to settle at $97.2 a barrel. Today, the Asian Markets are trading extremely weak with Nikkei & Hang Seng trading down by 3.2% & 5.1% respectively.
Shanghai & Singapore Strait are trading down by 5% & 4.7% respectively.

On Tuesday, the FIIs were net sellers of Rs. 1241 crores in the cash markets, while Mutual Funds were net buyers of Rs. 242 crores. As per the provisional figures, FIIs were net sellers of Rs. 1064 crores in the cash market on Wednesday, while they were net sellers of Rs. 383 crores in the F&O markets.

Today, we expect the Markets to open gap down following weak global cues.
Sensex could retest the earlier lows of 12514 made in July 2008. However, from those levels it could witness some recovery.