Tuesday, August 29, 2006

How will the market be today??

Volatility may heighten ahead of derivatives expiry
The market may open firm on the back of steady to firm Asian markets and on further fall in crude oil price. In the next two days, the market may turn volatile due to alternate bouts of short covering and bull unwinding in the derivatives segment ahead of expiry of August 2006 derivatives contracts on Thursday (31 August). Historically, short covering has been witnessed ahead of the futures expiry.

Asian stock markets inched higher on Wednesday on growing expectations of an extended pause in US interest rate rises, but gains were limited by worries of flagging consumer confidence in the world's biggest economy. Key benchmark indices in Hong Kong, Japan, Taiwan and Singapore were up by between 0.29% to 1.6%. South Korea’s Seoul Composite was slightly lower.

US stocks rose on Tuesday as minutes from the latest Federal Reserve meeting helped to cement investors' view that the Fed won't need to raise interest rates again any time soon and crude oil prices dropped below $70 a barrel. The Dow Jones industrial average gained 17.93 points, or 0.16% to end at 11,369.94. The Standard & Poor's 500 Index added 2.50 points, or 0.19% to finish at 1,304.28. The Nasdaq Composite Index climbed 11.60 points, or 0.54% to close at 2,172.30.

Crude oil recouped part of Tuesday’s fall. NYMEX crude for October delivery rose 29 cents to $70 a barrel in Asian trading on Wednesday, supported by an expected decline in US crude and gasoline stocks in statistics due later on Wednesday and Iran's determination to press ahead with its nuclear programme.

As per provisional data, FIIs bought shares worth a net Rs 203 crore on Tuesday (29 August), the day when Sensex had risen 87 points. On Monday 28 August, FIIs bought shares worth a net Rs 43.40 crore. There has been sustained FII buying since late July 2006.

Mutual funds sold shares worth a net Rs 11 crore on 28 August. Mutual funds are sitting on good amount of cash and they may step up purchases at declines.


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