Pre Session- Sensex may open lower on weak global cues Analysis for May 18, 2012

The key domestic benchmarks are likely to witness a gap down opening today amid weak cues from Asian markets. Asian markets fell on Friday amid concerns that Europe's debt turmoil is deepening, while an unexpected contraction in US manufacturing activity signaling a fading pace of the nation's economic recovery. While Moody's Investors' Services cut the ratings of 16 Spanish banks, citing a recession and mounting loan losses, Fitch lowered the rating of the debt saddled Greek economy by one notch to CCC from B- amid concerns that the nation may not be able to keep its euro membership intact. Sentiment also weakened after the Federal Reserve's Philadelphia general economic index, fell to -5.8 in May 2012, signaling a contraction in manufacturing. The MSCI Asia Pacific Index slid 1.5 percent as of 9:21 a.m. in Tokyo and is down 0.1 per cent this year. Shanghai Composite was up 1.39 per cent, Hang Seng was down 2.20 per cent and Nikkei 225 shed 2.44 per cent. Weak cues from US stock markets may also dampen domestic sentiment during morning trade. The key domestic benchmarks are likely to open lower on weak global cues.

On Thursday, the key domestic benchmarks ended higher in volatile trade led by buying in FMCG and realty stocks. However, market sentiment remained weak as the Sensex erased most of its earlier gains as endless Eurozone worries and a rupee nearing an all-time low sparked selling in stocks in late trade. After witnessing a gap up opening, the key domestic benchmarks extended gains and surged to the day's high as firm Asian market cues lifted sentiment. Moreover, yesterday's heavy sell-offs in stocks offered good buying opportunity at lower levels. The key domestic benchmarks pared gains in noon trade as the deepening worries over Europe's debt turmoil came back to bite investors. Profit -booking at existing levels and weak European cues sparked selling in late trade, however the benchmarks held on to slender gains to close the day on a positive note.

BSE SENSEX closed at 16,070.48, up by 40.39 points or by 0.25 per cent and the NSE Nifty ended at 4,870.2, up by 11.95 points or by 0.25 per cent. The BSE Sensex touched intraday high of 16,240.18 and intraday low of 16,007.92 The NSE Nifty touched intraday high of 4,922.25 and intraday low of 4,850.2. Meanwhile, the BSE MIDCAP closed at 5,880.57, up by 1.15 points or by 0.02 per cent, while the BSE SMLCAP ended at 6,270.36, up by 5.41 points or by 0.09 per cent.

US stock markets tumbled on Thursday as the S&P 500 fell to a four-month low as concerns over the deepening debt turmoil in Europe rattled investors. Sentiment weakened after Fitch lowered the rating of the debt saddled Greek economy by one notch to CCC from B- amid concerns that the nation may not be able to keep its euro membership, while mounting worries over the health of Spanish banks raised concerns that Europe's debt turmoil was deepening. Weak US economic indicators added to the negative sentiment and signaled a fading economic recovery. The Federal Reserve's Philadelphia general economic index fell to -5.8 in May 2012, signaling a contraction in manufacturing, while US jobless claims were unchanged at 370,000 in the week ended May 12 ,from the previous week, raising doubts over the strength of the US job market recovery. Consumer Discretionary and Financials fell 2.7 per cent and 2.1 per cent, respectively.

The Dow Jones Industrial Average closed down 1.24 per cent or 156.06 points at 12,442.49, Nasdaq ended down 2.10 per cent or 60.35 points at 2,813.69 and S&P 500 ended lower by 1.51 per cent or 19.94 points at 1,304.86.

The FII's on Thursday stood as net sellers in equity but net buyers in debt. Gross equity purchased was Rs 2,243.10 crore and gross debt purchased stood at Rs 806.70 crore. Gross equity sold was Rs 2,724.70 crore and gross debt sold stood at Rs 587.70 crore. Net investment in equity and debt was Rs (481.60) crore and Rs 219 crore respectively.

Top traded volumes on the NSE Nifty were Jaiprakash Associates Ltd. 207,78,912, Tata Motors Ltd. 136,69,207, Hindalco Industries Ltd. 116,56,030, ITC Ltd. 101,32,389 and Infrastructure Development Finance Company Ltd. 73,72,516.

On NSE, total number of shares traded was 58.01 crore with a total turnover of Rs 9,737.46 crore.

In the NSE F&O segment, total number of contracts traded in index futures was 458,605 with a total turnover of Rs 10,400.64 crore and total number of contracts traded in stock futures stood at 502,827 with a total turnover of Rs 11,671.27 crore. Total number of contracts traded in index options was 35,25,250 with a total turnover of Rs 87,124.33 crore and total number of contracts traded in stock options was 212,753 with a total turnover of Rs 5,189.45 crore.