Post Market Commentary – 3-April-08

BSE Sensex gained 82.15 points or 0.52% at 15,832.55

S&P CNX Nifty gained 17.4 points or 0.37% at 4,771.60.

From recent low of 14,809.49 on 17 March 2008 Sensex has recovered 1023.06 points or 6.9% at current 15,832.55. From the recent high of 16,371.29 on 28 March 2008, Sensex is off 538.74 points or 3.29%

As per the provisional figure on NSE, foreign institutional investors were net sellers of Rs 393.21 crore in Indian equities while domestic funds were net buyers of shares worth Rs 265.39 crore.

The market breadth was negative: On BSE 1215 shares advanced as compared to 1409 that declined. 63 shares remained unchanged.

The BSE Mid-Cap index down 0.4% to Rs 6,387.23 and BSE Small-Cap index down 0.91% to 7,840.29

IT stock surged on hopes a US recession might not be deep as feared. Wipro (up 5.04% to Rs 435.30), Infosys (up 2.68% to Rs 1,521.65), Tata Consultancy Services (up 4.13% to Rs 885.95) and Satyam Computer Services (up 5.11% to Rs 428.05) edged higher. The US private sector added 8,000 jobs in March 2008, according to a report on Wednesday by ADP Employer Services, surpassing economist expectations. IT firms derive more than half of their revenue from exports to US.

US stocks declined on Wednesday after Federal Reserve Chairman Ben Bernanke said a recession was possible, spurring profit-taking a day after the market's biggest rally in two weeks. The Dow Jones industrial average shed 48.53 points, or 0.38%, at 12,605.83. The Standard & Poor's 500 Index lost 2.65 points, or 0.19%, at 1,367.53. The Nasdaq Composite Index was down 1.35 points, or 0.06%, at 2,361.40.

Prospects of further monetary tightening by the Reserve Bank of India (RBI) following a surge in inflation is a cause for concern at a time when the already high rates are pinching the domestic industry. The surge in inflation has triggered fears that RBI my raise cash reserve ratio (CRR). An increase in CRR would suck out liquidity immediately pushing up the cost of funds and thereby curbing demand.

The next major trigger for the market is Q4 March 2008 results of India Inc. As per market talks IT bellwether Infosys may issue muted guidance for the year ending March 2009 in the backdrop of a slowdown in the US economy. Infosys unveils Q4 results on 15 April 2008.