Key benchmark indices are likely to open lower mirroring weak global cues. Global stocks tumbled to a new five-year low as investors withdrew from equity markets on worries that global economic slowdown may hurt corporate profitability.
Volatility is likely to remain high as derivative contracts for October 2008 series expire on Wednesday, 29 October 2008. As per reports, marketwide rollover of positions was 37% while that of Nifty stood at 45% from October 2008 series to November 2007, by Friday, 24 October 2008.
India Inc.'s report card for the September 2008 quarter so far shows a muted bottomline growth, partly due to a surge in interest cost. Aggregate results of 875 companies showed a 6.2% rise in net profit on 28.5% increase in net sales in Q2 September 2008 over Q2 September 2007. Interest cost jumped 35.6% in Q2 September 2008 over Q2 September 2007.
In the midst of a credit turmoil gripping economies across the world, the markets will keenly watch the second quarter earnings of the country's two largest lenders State Bank of India (SBI) and ICICI Bank due today, 27 October 2008. The focus is on ICICI Bank for its exposure to some of the crisis-ridden institutions in the US including Lehman Brothers Holdings Inc. SBI's results will also be watched, as being the largest lender of the country it would serve a benchmark indicator for the entire sector. If the repeated assurances from the management of the two banks that they were on a sound footing and the impact of global crisis was negligible come true, it could turn out to be a major trigger for the beaten-down domestic bourses, which are keenly waiting for any positive cues.
While governments and central banks across the globe are expected to take further dramatic action to prop up the global financial system this week, there is concern it will not be enough to prevent companies from slashing production and jobs as sales get hit and financing remains difficult.
Central banks are likely to launch new coordinated emergency action this week to calm panic in financial markets. Reports indicate the US Federal Reserve is widely expected to announce a 50 basis-point cut in overnight rates on Wednesday, 29 October 2008 that would take them to 1%, the lowest level since June 2004, with some expecting an even deeper reduction to 0.75%.
Most Asian markets were trading lower today, 27 October 2008. China's Shanghai Composite was down 2.84% or 52.22 points at 1,787.39, Hong Kong's Hang Seng plunged 1.83% or 231.46 points at 12,386.92, South Korea's Seoul Composite slipped 1.49% or 13.95 points at 924.8, and Taiwan's Taiwan Weighted tumbled 5.24% or 239.78 points at 4,339.84. However, Japan's Nikkei was up 0.40% or 30.42 points at 7,679.50.
US markets declined in volatile trade on Friday, 24 October 2008 as fears of a full-blown global recession intensified and investors dumped risky assets. Dow plunged 312.30 points, or 3.59%, to 8,378.95. The S&P 500 index slipped 31.34 points, or 3.45%, to 876.77, and the Nasdaq Composite index lost 51.88 points, or 3.23%, to 1,552.03.
Back home, markets suffered severe setback on Friday 24 October 2008 plunging to three year lows mirroring weak global equities on worries about a sharp global economic slowdown and disappointment from the second quarter monetary policy review of the Reserve Bank of India. The BSE 30-share Sensex plunged 1070.63 points or 10.96% to 8,701.07, recording its biggest fall in percentage terms since May 2004 and the S&P CNX Nifty was down 359.50 points or 12.2% to 2,584.
Foreign institutional investors (FIIs) were net sellers worth Rs 1431.56 crore while mutual funds bought shares worth Rs 514.26 crore on Friday, 24 October 2008, according to provisional data on NSE.
US light crude for December 2008 delivery fell 22 cents to $63.93 a barrel today, 27 October 2008 after touching a 17-month low of $63.67 as an emergency production cut by OPEC was shrugged off by traders anxious about the onset of a deep global recession
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