Markets at day's low, index heavyweights drag

Benchmark indices are trading near day’s low weighed down by financials, capital goods and oil shares.

Investor sentiment was hit adversely after minutes from the Federal Reserve's last meeting signaled US stimulus may be reduced in coming months. The US central bank currently buys bonds worth $85 billion a month in a bid to hold interest rates low and encourage economic growth in the world's biggest economy.

At 1300 hrs, the Sensex was down 315 points at 20,320 and the Nifty gave off 96 points to trade at 6,027.

Adds Mohit Gaba, Independent technical analyst & trader,” 5980 - 6000 are the levels to watch out for, the Nifty was in a broad range of 6000 - 6350 and it now looks likely that it will break through the lower end of this range, we could see 5800 again soon”.

Downbeat China manufacturing activity added to gloom in most Asian stock markets on Thursday, while emerging market currencies faltered as the dollar charged ahead after the US Federal Reserve's latest minutes hinted at stimulus tapering.

MSCI's broadest index of Asia-Pacific shares outside Japan shed about 1.3% to its lowest point since middle of last week.

But Japan's Nikkei stock average bucked the region, rising 1.6% as the yen weakened against the dollar and on plans by a major government fund to invest more of its $2 trillion funds in riskier assets.

Back home, foreign institutional investors (FIIs) bought shares worth 800 million rupees on Wednesday compared with more than 10 billion rupees each on Monday and Tuesday.

The rupee falls to 62.85 versus its previous close of 62.57/58, after earlier hitting a session high of 62.97.

Losses track global gains in dollar after minutes from the U.S. Federal Reserve's October policy meeting suggested the central bank could soon move to taper monetary stimulus.

On the sectoral front, BSE Bankex, Consumer Durables, Realty and Capital Goods indices have plunged by nearly 2% each followed by counters like FMCG, TECk, IT, Metal, Oil & Gas, PSU, Power, Healthcare and Power, all declining by 1% each.

The main losers on the Sensex at this hour include HDFC, Infosys, Sesa Sterlite, Sun Pharma, ITC, L&T, ICICI Bank and ONGC, all dipping between 2-3%.

Metal shares have edged lower as a preliminary gauge showed that China's manufacturing activity decelerated this month. China is the world's largest consumer of copper and aluminum.

Among other shares, Amara Raja Batteries is trading higher by 3% at Rs 340, extending its previous day’s nearly 4% rally, in otherwise weak market, after brokerages raise target price.

Future Retail has dipped nearly 5% to Rs 75.55 after the National Stock Exchange (NSE) decided to remove the stock from future and options (F&O) contract from January 31, 2014 onwards.

The market breadth in BSE remains weak with 1,334 shares declining and 796 shares advancing.