Markets extend losses in noon trades

Markets extended losses in noon trades on continued weakness in bankex, auto and realty indices.

The Sensex dropped 110 points to touch a low of 20,450. Nifty is down 30 points at 6,127.

Mid and small-cap outperformed the benchmark. Mid-cap index slipped 10 points to 7,863. Small-cap index was trading flat at 9,847.

Meanwhile, Asian stocks advanced and oil hovered near a 27-month high, supported by U.S. data suggesting a recovery in the world's biggest economy was gathering momentum.

BSE FMCG index jumped 1% to 3,730. Oil & gas and IT indices are up marginally.

Banking index has slipped further to 13,191 - down 2%.

Indusind Bank shed 3.3% to Rs 256. Heavyweights ICICI Bank and SBI were down 2.5% each at Rs 1,115 and Rs 2,749.

HDFC Bank slipped nearly 2% at Rs 2,387 on reports that the bank hiked its interest rates on retail term deposits up to 1.25%, depending upon the maturity period.

Other losers in the sector were Union Bank, Yes Bank and IDBI Bank.

"I expect to see some pressure in December 2010 and March 2011 numbers. Banks have raised BPLR rates and the Reserve Bank of India (RBI) wants to narrow the spread which the banks earn to bring down inflation. Hence, banks’ bottomline will get hit", says Arun Kejriwal, Founder, Kejriwal Research and Investment Services.

Auto and realty indices are trading 1% lower this afternoon.

Bajaj Auto and Amtek Auto slipped 2-3% each. Maruti Suzuki was down 1% at Rs 1,413 in spite of a 17% rise in December sales.

Other losers include communication stocks - Reliance Communications and Bharti Airtel. Metal stocks - Hindalco, Tata Steel were also in red.

Meanwhile, Hindustan Unilever and ITC from the FMCG pack jumped over 1% each to Rs 319 and Rs 176, respectively.

Shares of Suzlon surged 5% on news that Spanish wind turbine manufacturer Gamesa is likely to pick up a majority stake in the Indian wind energy firm.

Jindal Steel and Sterlite added 1% each.