Markets have erased early gains and have slipped into red zone tracking weak opening of the European markets. At 1300 hrs, the Sensex was down 59 points at 17,072 while Nifty fell 17 points at 5,172.
On the global front, Japan's Nikkei share average ended lower in choppy trade and closed out its worst April since 2005 on Friday, after the Bank of Japan's move to boost its bond buying failed to ignite lasting confidence among investors over the fragile economy. Nikkei, Strait Times, Hang Seng, Taiwan and Shanghai declined between 0.1-1%.
Meanwhile, European markets have opened weak with CAC, DAX and FTSE declining by over 1% each.
Standard & Poor's on Thursday cut its credit rating on Spain by two notches, citing expectations the government finances will deteriorate even more than previously thought as a result of a contracting economy and an ailing banking sector.
The ratings agency, which downgraded Spain to BBB-plus from A, also put a negative outlook on the credit and said Spain's situation could deteriorate further unless ambitious measures were taken at European level.
Back home, BSE Realty index has plunged by nearly 2% followed by counters like Metal, PSU, Capital Goods, FMCG and Oil & Gas, all declining by almost 1% each. Apart from Technology and Consumer Durable, all the major BSE sectoral indices are trading in red zone.
Index heavyweight Reliance Industries is down by almost 1%. Reliance Industries has reported natural gas production from its eastern offshore KG-D6 fields dropping to less than 34 million standard cubic meters a day. ONGC has also declined by 1%.
From the Realty pack, DLF is the top Sensex loser, down over 3%.
Banking and financial shares like SBI, HDFC and HDFC Bank have slipped between 1-2%. According to reports, the Cabinet has approved a proposal to cap shareholders’ voting rights in private banks at 26% irrespective of their total holding.
Capital Goods major L&T and BHEL have plunged by nearly 1% each.
Other notable losers include Coal India, Bharti Airtel, Tata Steel, Sterlite, Sun Pharma and Tata Motors.
On the gaining side, ICICI Bank is the top Sensex gainer, up over 1% ahead of its financial results for the fourth quarter ended March 2012, schedule to declare today.
Meanwhile, BSE Midcap and Smallcap indices have also lost ground and are trading weak, both declining between 0.4-1%.
The market breadth in BSE turns unhealthy with 1,458 shares declining and 1,089 shares advancing.