SGX Nifty: Caution on weak global cues, SGX Nifty at huge discount

SGX Nifty: Caution on weak global cues, SGX Nifty at huge discount

14 Aug, 2008, 0953 hrs IST,Mandar Nimkar, ECONOMICTIMES.COM

MUMBAI: A rebound in crude oil prices, foreign investors selling in futures and Singapore Nifty futures quoting at 64 points discount points to a negative opening for the Indian markets Thursday.

Trade today is seen cautious with negative bias ahead of inflation data. Also, with no respite in the participatory notes issue from the SEBI meet, FII flows may be adversely affected in near term. Analysts expect inflation to have risen to 12.49 per cent in the week to Aug 3.

Ex-chairman of PM’s Economic Advisory Council, Dr. C. Rangarajan expects GDP growth at 7.7 per cent against 8 per cent projected by the government and RBI. He also expects inflation to cross 13 per cent and for RBI to achieve the 7 per cent target by March 2009 challenging.

He expects inflation to moderate to 9 per cent. If 7 per cent target of RBI is to be achieved, then more tightening and moderating consumption and growth is required, which is not good news for equities.

Wednesday's trading pattern suggests that indices are encountering strong resistance at their respective 100DSMA levels-- Nifty at 4611.98 and Sensex at 15411.54. Added to this, the indices have closed below 5DSMA level--Nifty at 4551.01 and Sensex at 15227.27. The relief rally is already 2-3 weeks old, and today being the last day of this trading week, a negative close is likely as global cues suggest. The markets will remain closed Friday for Independence Day elebrations.

"Considering the current cues from global markets, I will advise investors to exit long positions, sell portfolios which are not performing and increase cash levels to minimum 50% from now, so that they get the same stocks much cheaper at a later date. For trading, buy put on any rally," said Sagar Divekar, analyst with Arnava Global.

Crude oil for September delivery advanced 2.6 per cent to $116 a barrel, the largest rise since July 30. A measure of six metals traded on the London Metal Exchange rose 3.2 percent, the largest gain since March 27. Currently crude oil was trading at $116.81.

Foreign investors net sold futures worth Rs 754 crore and options to the tune of Rs 154 crore. Put-call ratio of Nifty open interest declined to 1.24 levels.

Today, most of the Asian stocks climbed after a rebound in oil and metals prices boosted raw material suppliers and transportation companies. US stocks dropped for a second day Wednesday as earnings from Deere disappointed investors, retail sales declined and Merrill Lynch & Co. said the contagion from the collapse of the sub-prime mortgage market is far from over.


Source: http://economictimes.indiatimes.com/Market_News/_SGX_Nifty_at_huge_discount/articleshow/3363375.cms