Markets at day's low; auto index tumbles

Markets dropped from its highs in mid-morning trades on weak auto and banking stocks.

Sensex after touching a high of 20,426 pared gains and dropped in to red. The index touched a low of 20,210.

Nifty was down 18 points at 6,062.

Traders are taking a cautious position ahead of the key data which is to come out later today. The government will be announcing yearly inflation numbers at around noon.

Broader markets are also trading on a more-or-less flat note. Mid-cap index slipped 0.2% to 7,737 while small-cap index was up 0.12% at 9,751.

Most Asian stocks edged higher today as a stronger dollar boosted earnings prospects for exporters. Jakarta Composite dropped 0.75% to 3,755. Shanghai Composite slipped 0.4% to 2,827. Taiwan Weighted was down 0.21%.

BSE auto index shed 0.5% to 9,914. Bajaj Auto extended Wednesday's losses and dropped 3% to Rs 1,335. The company's total vehicle sales declined 7.69% and motorcycle sales declined 8.3% in December 2010 over November 2010. Mahindra & Mahindra and Hero Honda shed 1% each to Rs 763 and Rs 1,887, respectively.

"There is a lot of steam left in the auto sector in the short-term and the long-term. We had a great monsoon and there is more money in the hands of people in urban and rural India. Agricultural prices are also higher. Hence, automakers may rise further but may not continue to outperform the markets", said Andrew Holland, CEO (Equities), Ambit Capital.

Bankex, realty and metal indices are trading in red.

Sterlite dropped 2.7% to Rs 186. ONGC slipped 2.3% to Rs 1,236.

SBI and Cipla dropped 1.6% each. Larsen & Toubro, Jindal Steel and ICICI Bank were in red.

Meanwhile, Reliance Communications gained 1.5% at Rs 142. Bharti Airtel added 1.2% to Rs 354.

HDFC Bank, Reliance Infrastructure, Tata Power and Tata Steel were in green. Reliance added 0.6% to Rs 1,081.

The government has reportedly deferred its decision to free the prices of urea for now and bringing it under the Nutrient Based Subsidy (NBS) policy regime even as a panel of secretaries has been asked to work out a viable model for decontrolling the prices. Following this fertiliser stocks dropped in the red.