Markets slip in late trades, Sensex down 300 pts

The markets slipped 2% as investors turned cautious and booked profits ahead of Ben Bernanke’s speech later in the day, heavy selling in realty and metal shares also weighed.

The Nifty touched a high of 4,861 in the morning session, but gave up all the gains and closed at 4,747, down 92 points, and the Sensex plunged below 16K to end at 15,848, down 297 points.

Investors turned jittery ahead of Ben Bernanke’s speech at the annual summer retreat in Wyoming, where he might lay out some plans to steer the weak economy. There are concerns the Federal Reserve may not be left with any rabbits in its hat after the government spent nearly $2.3 trillion in a massive bond buying program since 2009.

Shanu Goel, Senior Research analyst-Bonanza Portfolio said, “The global developments continue to cast a shadow on the stock market. Fed meeting tonight and its outcome is likely to influence the market trend in the short term.”

The Nifty index broke 4,800 support,, and may decline further according to analysts. Shailesh Kadam, Associate Vice President-Institutional Derivatives from PINC Research said, “Fresh shorts in the system are putting pressure on the markets, there is a high possibility that markets will break the 4,800 level and drift towards the 4,500 level.”

Asian markets also ended on a subdued note. The Hang Seng and Shanghai Composite were down 0.1% and 0.8% each, and Nikkei Stock Average ended up 0.3%. European markets too followed suit and were trading in the red; FTSE, CAC and DAX were trading down between 0.5-2% each.

Back home, Reliance Industries (down 4.6%), State Bank of India (down 3.3%) and ITC (down 2.7%) accounted for a loss of 140 points on the Sensex. Other prominent losers were-JP Associates, DLF and Tata Steel, down 4-8% each.

Only three components on the Sensex ended in the green. Hero Motocorp, Mahindra & Mahindra and Infosys were up between 0.6-3% each.

All the sectoral indices ended in the red.

High-beta realty shares were leading the losses on expectations that the Reserve Bank of India will continue its aggressive monetary policy stance and tighten further in September, despite downside risks to growth after week-on-week inflation was reported at double digits yesterday. Anant Raj Industries plunged almost 8%, DLF and Unitech were down almost 5% each.

Metals were the next worst hit after Supreme Court ordered a ban on mining iron ore in Tumkur and Chitradurga districts in Karnataka, down 4.1%. Sesa Goa and JSW Steel slipped over 6%, and Tata Steel dipped 5%.

From the broader markets, midcap and the small cap indices ended down almost 2% each.

Market breadth was extremely negative, 2221 stocks declined for 637 stocks which advanced.