Markets opened lower led by weak cues from Asia and Wall Street. Sell-off in banking stocks weighed on the index. The Sensex dropped 90 points, to 20,406 and the Nifty lost 34 points, 6112 in opening trades.
Wall Street edged lower as investors abandoned commodity stocks after they touched multi-year highs. Concerns of lower supermarket profits dragged Wall Street lower. Asian markets also retreated in the morning trade on back of losses in resource related shares. Hang Seng was off 0.1%, to 23,637 dragged down by financials on report that China may adjust reserve requirements, China's Shanghai Composite lost 0.3% to 2,843 and Japan's Nikkei 225 was trading flat at 10,374, down 0.2%. South Korea's Seoul Composite was down 0.3%, Straits Times was up 0.1% and Taiwan Weighted slipped by 1%.
While markets have opened in the red and are expected to remain in a tight range for the day, Analysts are bullish on the markets in long run. Gopal Agrawal, Deputy CIO and head-equity, Mirae Asset MF said, "expect people to reap good returns mainly because the global liquidity is expected to remain strong. The US is already on a recovery path even though the Euro zone crisis is deep-rooted. Federal Reserveis bound to maintain high liquidity to support US as well as the global markets. Hence other emerging markets will perform well amd Indian markets are likely to stay strong."
Investors cashed out of banks after several banks raised deposit rates in the past week which are expected to hurt banks margin in the near term. The BSE banking index was down 1.1%, ICICI Bank declined 1.7%, HDFC Bank was off 1.1% and State Bank of India Slipped 0.9%.
Auto ancillaries witnessed selling pressure after the recent run up; the index was down 0.6%. Amtek Auto dropped 2%, Apollo Tyres was down 1.6% and Bajaj Auto declined 1.1%.
Capital Goods index was leading the sectoral pack, up 0.6%. Alstom Projects advanced 2.6%, Thermax climbed 1.2% and Suzlon Energy edged higher by 0.8%.
Among individual stocks Larsen & Tourbo was up 1%, top gainer on the Sensex in the opening trade on reports of restructuring plan that will divide Rs 37,000 crore company into nine independent entities. Chairman AM Naik said that each company will have CEO, CFO and HR Head. Britannia Industries dropped 1.4% on reports on copyrights violations. Kraft filed a suit in Delhi High Court blaming Britannia for copying Oreo biscuit. Mahindra and Mahindra was down 0.4% on reports that the company is expected to raise vehicle prices by one percent in 2-3 days.
Only seven components on the Sensex were trading in the green.JP Associates was the prominent gainer, up 1%, TCS surged 0.7% and Hindustan Unilever gained 0.4%. On the other hand HDFC and DLF lost 1%, and Sterlite Industries dropped 0.9% were the prominent losers on Sensex.
Broader markets were muted; the midcap and smallcap indices were trading flat. Market breadth was negative 864 stocks declined for 836 stocks which advanced.
