Global cues drag markets

Markets ended in the negative zone owing to global cues, crude price worries and weakness in select sectors. The Sensex, after opening at 18,431 dropped to a low of 18,261 within the first hour of trade. Thereafter the index exhibited range bound movement for rest of the day and finally ended at 18,322 - down 148 points.  Meanwhile, the NSE Nifty dropped 37 points to 5,494.

Markets will be looking towards the RBI policy review on March 17 and the fourth advance tax payment installment on March 15 for direction, now that the Union Budget is over.

Asian markets slipped in trades as crude prices rose again after easing on Wednesday. Continuing unrest in Libya and Middle East put pressure on crude prices. Organization of the Petroleum Exporting Countries (OPEC) has reportedly said that there is no pressure on the supply side as of now and therefore there will be no need to hold an emergency meeting. China also posted a dissapointing trade deficit of $7.3 billion. Shanghai Composite shed 1.5% to 2,958 as investors took to booking profits in banking shares. Nikkei fell 1.5% to below a key support level to 10,434.

Back home, the BSE mid and small-cap indices outperfomed the broader markets and only slipped below the dotted line towards the end of the day. The mid-cap index shed 0.1% to 6,597 while the small-cap index dipped 0.2% to 7,989.

Banking stocks dropped on inflation concerns. Meanwhile, food inflation dropped marginally in February, but remained at elavated levels, giving rise to fears of further monetary tightening. India's food price index rose an annual 9.52% in the week, slower than a 10.39% rise in the previous week as prices of vegetables, potatoes and rice declined.

The Bankex was down 1.2% at 12,307. Banking heavyweights, ICICI Bank shed 2% at Rs 1,014. Canara Bank, Yes Bank and SBI dropped 1.6% each to Rs 610, Rs 210 and Rs 2,589, respectively. Federal Bank, Axis Bank, Kotak Mahindra Bank and Bank of India slipped around 1% each.

Metal stocks dropped, mirroring cues from the LME.  BSE metal index tumbled 1.2% to 15,670. JSW Steel tumbled 3% to Rs 938. Hindustan Zinc, Jindal Saw and Sesa Goa dropped around 2% each. Hindalco, Welcorp, Jindal Steel, Sterlite were the other big losers in the space. Tata Steel shed 2.5% at Rs 597 as Rio Tinto raised its offer price for Riversdale Mining. Tata Steel is Riversdale's biggest shareholder.

Reliance Communications advanced 0.5% to Rs 100 following reports that the company will save Rs 500 crore in annual interest costs after securing aggregate financing of Rs 8,700 crore from a Chinese bank.

ONGC gained 1.6% at Rs 275. The company's follow-on public issue (FPO) has been deferred ) to the second half of 2011 following a faux pas in appointment of independent directors on the company board.

DLF added 1.5%, followed by Wipro, Reliance Infra and BHEL. Auto stocks managed to recover with Hero Honda, Maruti Suzuki and Tata Motors ending with partial gains.

However, Tata Power dropped 3%, followed by TCS, Bajaj Auto, NTPC, HUL and Jaiprakash Associates. Market heavyweight, Reliance dipped 1% to Rs 984, followed by Larsen & Toubro, HDFC and Sterlite.

Mahindra & Mahindra fell on reports that the company two-wheeler, Stalio's production fell drastically by 81% in the last three months to just 139 units in February.