Markets are expected to end the choppy session in red as selling pressure continues in banking and realty stocks. Sensex opened
flat at 10,983 and continued to trade in the red throughout the day. The benchmark index has fallen 32 points at 19,943 and the Nifty has dipped 16 points to 5976.
Markets will remain muted in December due to subdued FII activity. Nirmal Jain, Chairman, IIFL said, "from Thanksgiving to Christmas, there is more of a holiday mood in the US. FII activity will pick up in the month of January. So, if the peak has to be attained it is more likely in the next quarter."
Concerns over China tightening resurfaced in Asia after media reports that China may hike rate this weekend. China's Shanghai Composite Index rose 0.7%, Hong Kong's Hang Seng Index was up 0.8%, Japan's Nikkei Stock Average was off 0.3%, and South Korea'Seoul Composite advanced 0.5%. In Europe, markets have been trading marginally higher, with all eyes on the Irish budget vote.
Back in India, markets shrugged-off GDP growth forecast revision news. The GDP has been revised to 8.75-9% for FY11 from 8.5% earlier backed by high investment and strong domestic demand. The government also expects the fiscal deficit around the budgeted range of 5.5% of GDP for this financial year.
Investors have taken short positions in frontline and midcap banking stocks. Siddharth Bhamre, Head - Equity derivatives said," there
has been some apprehensions margin squeeze as deposit rates have gone up while lending rates have remain unchanged. Also sudden spike in 10 year bond yield fueled concerns over bond losses." Top lender State Bank of India has fallen 2.3%, ICICI Bank has
dipped 3.1%, Others such as Union Bank, Bank of India, Yes Bank, Axis Bank and IDBI Bank have fallen between 4-5%. Bhamre does not expect the quantum of fall to be huge, hence if investors are already short, he has advised to sell out-of-money puts or buy at the money calls.
Additinally, there CNBC has reported that Ramsarup Industry has Rs 1,800 crore of debt to restructure due to delayed project completion. CNBC reported tjat Punjab National Bank has the maximum exposure of Rs 400 crore to Ramsarup Industries. Other banks exposed to Ramsarup include IDBI Bank, United Bank, Axis Bank and Oriental Bank Corporation, annd SBI and ICICI Bank have been exposed marginally.
Unitech from the realty space bucked trend, the stock has surged 2.6% to Rs 65. However, profit booking was witnessed in other realty
stocks; Phoenix Mills has declined 4%, Indiabulls Real Estate has dipped 3.9% and DLF has lost 3%.
Oil & Gas index has been the top gainer on the sectoral charts, up 0.7%. The movers in this space are market heavyweight Reliance Industries, Cairn India, and ONGC, up over 1% each. Siddharth Bhmare said, "call writing in ONGC has been successful. Diesel price hike is now given, but this will not materially impact OMC's in an incremental positive way as crude is close to $90/bbl."
Top losers on the Sensex are ICICI Bank, DLF and JP Associates (down 2.5%). Prominent gainers are Hindalco (up 2.3%), Reliance Industries (up 1.4%), and Bharti Airtel (up 1.2%).
Broader markets were also leading the losses, midcap and smallcap index have fallen 0.9% and 1.6% each.