Pre-Market report on12.05.2008

[N.Sukumar]

( - ) X ( - ) = ??
===================================================
Crude Spike" is the new mantra for bears across the global financial
markets
last week. Wall Street plunged on friday with 'Dow'n Jones losing
120.9
points to close at 12,745.88, a tad lower than the critical resistance
level
of 12,750, while Nasdaq left a mere 5.72 points to end 2,445.52

International markets are turning cranky with oil continuosly rising
for the
last 5 trading sessions including 3 new highs. Surge in demand from
emerging
economies of Chindia (China & India) is named the new scapegoat. While
china
crude demand surged 5 percent in April.

While no one disputes that China and other emerging economies are
craving
more crude, the stunning rise of oil from $62 a year ago is hard to
explain
as only a matter of supply and demand. After all, analysts have noted
adequate inventories.

Goldman Sachs said last week oil prices can rise to $150-200 within
two
years; others say crude can plummet to as low as $40 or $50 a barrel
during
the same period. It is really a contradictory situation with OPEC
secretary
general Mr.Badri saying the market is well supplied and OPEC's
decision to
keep output unchanged after the winter season in the northern
hemisphere has
allowed U.S. crude inventories to build.

Instead of panicking in the current situation we are indeed happy for
the
crude spike as one more threat to the bull market will be addressed
soon and
with not with out a reason.

Indian Market cannot dance on its own and requires global cues as a
partner
at present. So time being there is no concept of decoupling and we as
investors need to have utmost patience to cope up with modern day
speculators. We once again re-iterate Indian Economy is here to stay,
no
matter obstacles keep hitting the country. It is just a matter of time
we
overcome the same.

Indian Markets are likely to swing wild though positives today cannot
be
expected in the wildest dreams. We have built into the crude spike
and
inflation jump during Friday's session. Do not jump and short the
market.
Keep an eye on the Asian Markets before trading today.

Market Close Box
BSE Sensex 16737.07 -343.58
NSE Nifty 4982.60 -99.10
USD Rs.41.38
Oil Nymex $125.9

N.Sukumar
Research Analyst