Markets continue to trade lower led by losses in realty and banking shares.The Sensex has pared most of the gains and is currently trading down 111 points, at 19,774, and the Nifty has dropped 31 points, at 5957.
--------------------------------------------------Updated at 1030 hours
Analysts expect the uptrend to continue and the indices may scale new highs after taking a breather. "Markets have surged sharply since September 2010. The downside, which started last week, can continue for some time. After this correction, Nifty could scale fresh highs of 6800-7200 by March next year," Mehraboon Irani, Sr. VP-Equity, FCH Centrum Wealth Managers said.
Wall Street ended on a flat note with light volumes and investors fretting that downtrend may not be over. Financials were the top losers after the Federal Reserve statement that they will have an evaluation of 19 large banks in order to see if they can deal with losses, if economic conditions dampen. However, markets in Asia were trading mostly up. Heng Seng index was pulled higher by financials and resource stocks. The index was quoting up 1.3%. Shanghai Composite also surged 0.6%t. Japan's Nikkei 225 and South Korea's Seoul Composite were up 1.5% each. Singapore's Strait Times sagged 0.5% and Taiwan Weighted was trading flat.
Among the stocks that are on the buzzer this morning is Axis Bank. India's one of the top-ranked manager of debt sales edged lower (down 1.3%) after rising almost 2% after the merger with Enam Securities yesterday. The deal was valued at Rs 2067 cr ($455 million), and Enam shareholders would receive 5.7 shares of Axis Bank for every one share held. Other stocks that reacted to news were Hindalco Industries, down 0.9% after it raised $4 billion to help finance debt and Suzlon rose over 3.5% on preferential allotment to IDFC Private Equity.
Power stocks were leading the gains led by Suzlon, up 4%, Crompton Greaves climbed 1.6% and Adani Power, up 1.5%.
Even FMCG stocks were trading higher pulled by Dabur India, up 3.3% on plans to buy US-based personal care products company Namaste Laboratories LLC and three subsidiaries for $100 million — its second overseas acquisition this year.
From the frontline space, Reliance Communications continued to face bad weather on reports of investment in Swan Telecom (Etisalt DB) which enormously benefited from 2G spectrum allocation under Raja's regime, although the company denied any wrong doing. The stock was down 4.7% at Rs 154. ICICI bank dropped 3.1% and Jindal Steel was down 1.8%.
Analsyst feel that some of the benchmark stocks were quoting at premium valuations, however, they do not rule out further upside. "Currently, the valuations of certain frontline stocks do seem stretched. However, considering the fund inflows, which could continue for some more time to come, I do not rule out the possibility of frontline shares becoming more expensive in the future," added Irani.
Gainers on the Sensex were, Sterlite Industries, up 2.2%, Hero Honda, up 2.3% and and Cipla, up 2.2%.
From the broader market space, midcap and smallcap indices were trading flat. Market breadth was positive, out of 2543 stocks traded, 1408 advanced and 1052 shares declined.