Pre Session Market Analysis for Apr 07, 2011

Markets are likely to open positive as Asian stocks are trading higher after the yen weakened against most of the competing currencies and as gold prices rose to a record for a second straight day in New York on demand for the yellow metal as a hedge against inflation.

The MSCI Asia Pacific Index rose 0.2% to 135.35 with about two stocks gaining for every one that declined. Further, Japan"s Nikkei 225 Stock Average is trading up by 0.57% to 9,639.43 as weakness in yen boosted export shares and as prices of crude oil and metal increased.

Further, Shanghai Composite is down by 0.24% to 2,994.23 and Hang Seng Index fell 0.15% to 24,247.76. Chinese stocks plunged as participants turned cautious after hike in interest rate to tackle inflation. Separately, Jakarta Composite is trading higher by 0.03%.

In the domestic arena, the markets are likely to follow the rout of global counter part and trade range-bound with upside movement. Realty, IT and Bankex pivotals will be in focus today. 

A look at the previous trading session

Domestic: On Wednesday, the domestic bourses ended on a lackluster note as the benchmark indices were seen consolidating in a narrow range below the baseline. During the morning trade, Asian stocks traded lower amid anticipation and worries that the Federal Reserve will pull out stimulus measures and after China raised interest rates. China has increased interest rates for the fourth time since the end of the global financial crisis to counter inflation.

The Japanese market slipped on growing concerns about the outlook of company profits as manufacturing activity in the island nation has been disrupted by the massive earthquake that had struck last month. Soon after a flattish opening, the benchmark indices surged above the unchanged zone and moved northwards.

However, the Nifty faced resistance near the 5,950 mark and profit booking came in from such level. The Nifty was seen dragging near the 5,860 level before recovering. During the second half of the session, the market started consolidating in a tight range in the negative terrain.

The Realty space gave good support to the market, whereas the IT, Banking and Metal space traded weak. Finally, the market ended in the negative terrain with moderate losses. The positive opening for the European bourses had limited impact in the domestic front. 

The BSE Sensex closed at 19,612.20 down by 74.62 points or by 0.38% and NSE Nifty closed at 5,891.75, lower by 18.30 points or by 0.31%. The BSE Midcap was at 7,193.87 higher by 33.46 points or by 0.47% and the BSE SmallCap closed at 8,786.94, up by 68.22 points or by 0.78%. The BSE Sensex touched intraday high of 19,811.14 and intraday low of 19,550.55.

International: On Wednesday, the U.S. markets closed higher owed to leadership by financial stocks. Initial support to the trade came from gains abroad, where participants in China took yesterday's news of another 25-basis point rate hike in stride upon their return from holiday. Additionally, news of a successful debt offering by Portugal also stimulated positive tone.

Positive tone in the morning trade benefited both blue chips and riskier small-cap stocks such that the Dow extended its two-year high with assistance from Cisco (CSCO 18.07, +0.85), which scored its best single-session gain in almost nine months. Further, the Russell 2000 Small-Cap Index touched a record high with help from La-Z-Boy (LZB 10.92, +1.08) following an analyst upgrade, whereas fellow small-cap issue American Superconductor (AMSC 14.47, -10.41) lost above 40% after the company cut guidance and announced that a key customer refused product delivery from the firm.

However, broad market buying interest wasn't strong enough to take the S&P 500 back through resistance at the 1340 line thus leaving the stocks to drift lower before securing support near the neutral line. Financials played significant role in lifting the broader market up from the flat line in afternoon trade.

Read more about: bse, nse, sensex, nifty
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