[R]4:00PM Merger news, widening current account deficit and rising oil prices affected trading sentiment.[/R]

-Yield on 10-year bond closed at 4.81% and 30-year bond closed at 4.93%.

-Crude oil rose 46 cents to close at $63.79 per barrel and natural gas closed 1 cent lower to close at $4.97 per mBTU.

-Gold surged $9.70 per ounce to close at $587.20, silver gained 41 cents to close at $11.29 and copper advanced 10 cents to close at $3.4145.

-Asian Markets closed higher led by a surge n tech stocks in Taiwan with the main index rising 3.01% and Philippines gaining 2.75%. Singapore rose 1.2%, South Korea and Hong Kong advanced 0.9% and Australia, Indonesia and Malaysia gained 0.6%.

-European Markets closed fractionally higher, however, auto stocks declined. Norway led the region with 0.9% gain followed by 0.22% rise in the UK and 0.35% rise in Switzerland. Germany lost 0.2%.

-Latin American Markets closed higher led by a steady rise in Brazil, Mexico and Argentina and Chile. Argentina gained 1.5%, Brazil advanced 0.8%, Mexico rose 0.64% and Chile edged 0.36% higher. Canada rose 0.8% on rise in energy prices.


[R]3:00PM Home builders confidence index drop to fifteen year low.[/R]
Home builders voted with a decline in confidence in home building activity. The September index as measured by the National Association of Home Builders declined to 30, three points lower than upwardly revised index at 30 in August. The index is at fifteen year low since 1991. In the four regions of the nation, the largest decline was registered in the North East followed by a decline in West, South and Midwest.

“Builders are adopting an increasingly cautious attitude in their near-term outlook for new-home sales,” said NAHB Chief Economist David Seiders. “They’re experiencing falling sales, rising sales cancellations, and increasing inventories of unsold units. And although many builders are offering substantial incentives to bolster sales and limit cancellations, many potential buyers now are waiting on the sidelines to see how the market shakes out before proceeding with a home purchase.

Construction and real estate industry is estimated to employ between 9 and 10 million people including builders, construction workers, real estate agents, mortgage brokers and property operators and bank lending employees.

William Poole, President of Fed Reserve in St Louis has said in the recent interview on Sept 11, 2006 that the slow down in housing market is given far too much weight in the news rooms across the country. He went on to say that the likely impact of the housing market slowdown on labor market is going to be marginal. He added that the construction labor forms less than 2.5% of total labor force.

[R]12:30PM European markets closed mixed.[/R]
European markets made a mixed performance at close as higher oil prices contributed to gains by commodities stocks but also pressured the automotive sector. BP added 1.1% amid reports that the company is set to launch a root-and-branch review of its global operations in response to last year''s Texas City refinery blast. Among auto stocks, German truck maker Man lost 5.3%, while Swedish counterpart Scania rose 5.9% after Scania rejected a $12.2 billion offer by Man. DaimlerChrysler dipped 0.8%, extending recent losses. U.S. stocks were steady Monday as investors were looking ahead to Wednesday’s FOMC meeting. London FTSE 100 advanced 0.2%, the French CAC 40 erased earlier losses to close flat at 5,146, while the German DAX 30 gained 0.2%.

Oil prices climbed back to over $64 after BP said that production from its giant Thunder Horse oil platform in the Gulf of Mexico would be delayed to 2008. Light crude October delivery jumped 82 cents to $64.15 a barrel. London Brent October delivery rose 74 cents to trade at $64.07. The U.S. dollar turned mixed versus major currencies. The euro traded at $1.2680, up from $1.2658. The dollar bought 118.03 yen, up from 117.59. The British pound stood at $1.8774, down from $1.8798. European gold rebounded from recent weakness. In London the precious metal traded at $579.50, up from $575.70 per ounce. In Zurich gold traded at $578.90, up from $574.70. Silver closed at $10.53, down from $10.55.

[R]11:30AM Market averages lost direction ahead of Fed’s decision.[/R]
Cautious ahead of the Federal Reserve''s decision on interest rates, many investors remained on the sidelines, while stock markets lost direction. Most of the major sectors made only modest moves. However, the semiconductor sector posted a significant strength, led by Freescale Semiconductor (FSL: chart) which rose 5.6% after the company agreed to be acquired by a private equity consortium for $17.6 billion. Oil service stocks also moved notably higher even though the price of oil turned lower after seeing some early strength. Researchers at Intel (INTC: chart) and the University of California claimed a breakthrough in creating lasers on computer chips, a development that could lead to sharp reductions in the cost of ultra fast data communications. Shares of Intel rose nearly 1%.

Among other movers, Applied Materials (AMAT: chart) gained 2.7% on a buyback program. Shares of Getty Images (GYI: chart) climbed 6% after J.P. Morgan upgraded its rating on the stock to Overweight from Neutral, citing valuation. At the same time, shares of Watson Wyatt (WW: chart) dropped 5.2% after UBS downgraded its rating on the company to Neutral from Buy. In late morning trading, the Dow Jones industrial average rose 0.96, or 0.01%. The Standard & Poor''s 500 index rose 1.71, or 0.13%, and the Nasdaq composite index rose 1.94, or 0.09%. Bonds fell, with the yield on the 10-year Treasury note at 4.83%, up from 4.79% Friday.

[R]10:30AM The Sensex ends above 12,000 level in a steady trading.[/R]
The Sensex on BSE advanced 61.71 points, or 0.5%, at close to 12,071.30, five month high. The market-breadth was positive. For 1,287 shares that advanced on BSE, 1,208 declined and 81 shares were unchanged. The turnover on BSE was Rs 2,878 crore, lower than Friday’s Rs 3,456 crore. The turnover on NSE was Rs 6,090.19 crore.

Most Active
Reliance Industries shed 1% to Rs 1129.15 on 13.2 lakh shares traded on BSE. Reliance was the most-active stock on BSE with over Rs 150 crore followed by Zee with Rs 106 crore, Mahindra Gesco with Rs 99 crore, Escorts with Rs 97 crore and L&T with Rs 86 crore.

Indian gas transportation firm Gujarat Gas Company Ltd. announced on Monday it signed a contract to buy 1.65 million cubic metres of gas from a unit of Britian’s BG Group.

Gainers
Large-cap Hindustan Lever surged 3% to Rs 250.95 for the second day in a row on heavy volume of 11.3 lakh shares on BSE. Cigarette maker ITC gained nearly 3%, to Rs 187.75. Cellular services company, Reliance Communications advanced 2.6% to Rs 326. Bharti Airtel, though, lost 0.6%, to Rs 443.25.

Cipla gained 2% to Rs 260.15. It obtained tentative U.S. FDA approval for Lamivudine and Zidovudine, both anti-AIDS drugs. Software service exporter, Infosys edged up 0.5% to Rs 1,818 and Wipro gained 0.5% to Rs 512.55. However, TCS lost 0.4% to Rs 999 and Satyam Computer shed 1% to Rs 820.35.