Wednesday, August 30, 2006

How will the market be today??

Volatility may prevail ahead of derivatives expiry
Steady to firm Asian markets and figures showing a surge in FII inflow in the past two trading sessions may trigger firm opening on the domestic bourses today. Oil price rose slightly but it remains sharply lower that a record high of $78.40 a barrel hit last month.

Volatility may be high today due to alternate bouts of short covering and bull unwinding in the derivatives segment ahead of expiry of August 2006 derivatives contracts. August derivatives contrasts expire today. The rollover from August to September contracts has been about 55% so far.

Asian stocks edged higher on Thursday (31 August) after the US government on Wednesday reported that gross domestic product grew at a pace that was slightly faster than first reported, in the second quarter. Key benchmark indices in Hong Kong, Japan, South Korea and Singapore were up by between 0.42% to 1.6%.

The Nasdaq rose and the blue-chip Dow edged up on Wednesday after a government report showed economic growth, while slowing, remains fairly strong. But comments late in the session from Jeffrey Lacker, the president of the Federal Reserve Bank of Richmond, took some of the shine off the market's advance. The Dow Jones industrial average advanced 12.97 points, or 0.11% to end at 11,382.91. The Standard & Poor's 500 Index was down a mere 0.01 of a point, or unchanged on a percentage basis, to finish at 1,304.27. The Nasdaq Composite Index rose 13.43 points, or 0.62% to close at 2,185.73.

NYMEX crude for October delivery rose 34 cents to $70.37 a barrel in Asian trading on Thursday despite an unexpected build in US crude and gasoline inventories, as Iran appeared set to defy a UN deadline to halt nuclear fuel work -- exposing the world's fourth largest oil exporter to possible sanctions.

As per provisional data, FIIs bought shares worth a net Rs 287 crore on Wednesday (30 August), the day when Sensex rose 17 points. The net FII inflow on Tuesday (29 August) was Rs 369 crore. Sensex had risen 87 points on that day.

Mutual funds bought shares worth a net Rs 73 crore on 29 August. Mutual funds are sitting on good amount of cash and they may step up purchases at declines.

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