Markets end near day's low

Heavy selling towards the end of the day, dragged the markets into red. The Sensex, after touching a high of 17,035 dropped 361 points from there to a low of 16,763. The index finally ended at 16,731 - down 108 points. The Nifty was down 37 points at 5,035.

Broader markets underperformed with the BSE mid-cap index slipping 1.7% to 6,399. Small-cap index was down 2% to 7,459.

Global markets remained subdued ahead of the eurozone crisis meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel in Paris. Asian markets reversed early gains. The Hang Seng dropped 0.2% to 20,212. Shanghai Composite was down 0.7%. However, Seoul Composite surged 5% in trades - its biggest gain in over two years.

In Europe, CAC dropped 2% while DAX shed 2.4%.

Back in India, inflation for the month of July eased to 9.22%. However, persistent price pressures in manufactured goods have raised the odds that policy will have to stay tight in the economy despite the rising risks to growth. The high inflation print still have most economists thinking that the RBI will have to extend its policy tightening spree.

“The 9.22% inflation number released today seems to be indicating that price rise could be finally relenting, but there remains some worries. Inflation now seems to be firmly entrenched in a couple of areas, such as some food items and some manufactured products. The WPI for July is still way above RBI's comfort level and could prompt the central bank to implement its twelfth interest rate hike since March 2010,” said Rajrishi Singhal, Head, Policy & Research, Dhanlaxmi Bank.

Most of the sectoral indices erased earlier gains and dropped into the negative zone. BSE realty index shed 5.3% after reporting disappointing financial results for the first quarter ended June 30, 2011 due to higher interest burden and rising input cost.

Total 148 companies from the realty and infra sectors which declared their June quarter results, have reported an average 26% year-on-year (y-o-y) fall in net profit at Rs 2,259 crore despite of 12% jump in operational income at Rs 30,706 crore. Interest cost jumped by 45% at Rs 2,516 crore on y-o-y.

HDIL tanked 12% to Rs 104. Anant Raj Industries, Sunteck Realty and Unitech dropped 5-8% each. DLF shed 6% to Rs 189 after CCI imposed a penalty of around Rs 600 for abusing its dominant market position.

BSE metal, bankex and oil & gas indices were down 1-2% each.

However, the IT index held on to some gains and ended up 1% at 5,062. TCS jumped up 2.5% to Rs 974. Infosys edged up 0.7% to Rs 2,392.  Among other stocks, Bharti Airtel rose 1.7% on bargain hunting. In the process, the communication stocks has reversed the last nine day's slide. However, Coal India and SBI gave up most of its morning gains and ended up marginally.

BSE market breadth was negative with 1,983 stocks declining and 850 advancing out of a total of 2,940 stocks traded.