Markets continue to trade weak

Markets erased all of yesterday's gains as global markets trembled on rate hike worries.

The Sensex opened at 20,372 and dropped to a low of 19,832 - slipping below the 20K mark. The index is now down 464 points (over 2%) at 19,845.

The Nifty has also dropped below the 6,000 mark after 11 trading sessions. The NSE index is now trading at 5,974 - down 147 points.

"The markets are in a corrective mode because they are close to peak and valuations are expensive. Until the Nifty holds on above 6000 levels, the markets will be in a short-term correction mode, but will recover fast. But, if the index breaches 6000 in coming sessions, it may touch 5900 and 5700 on the downside", says DD Sharma, Sr. Vice President – Research, Anand Rathi.

Asian bourses slumped as fears of a interest rate hike dragged the Chinese markets down 4%. Investors were worried as any hike in interestrates in the world's second largest economy would slow demand for oil and metals among others.

European markets are also trading in red. The CAC is down 1.3% while FTSE has dropped 1%. Euro zone finance ministers will be considering ways of solving Ireland's debt crisis.

On Monday, markets in India had ended a volatile session with 152 points gain as inflation numbers came out. A 8.5% increase in inflation increases chances that the RBI would not change key rates any more in this financial year.

New listing, Gravita is trading with a 78% premium at Rs 217.

All the sectoral indices are in red. BSE metal index has dropped 3% on declining prices of metal stocks worldwide.

Sterlite has shed 4.5% at Rs 174. Hindalco has dropped 4.4% to Rs 214. Jindal Steel has slipped 3.3% to Rs 657. Tata Steel is also down 2%.

BSE realty, auto and PSU indices are down 2% each.

Telecom stock- Bharti Airtel has gained 1.3% at Rs 314 following A Raja's resignation from the telecom ministry. HRD Minister, Kapil Sibal will now be handling the portfolio.

Tata Motors gas dropped 4.3% to Rs 1,198. Reliance Infrastructure, L&T, Tata Power and Jaipraaksh Associates have declined over 3% each.

Some of the other major losers are Maruti Suzuki, ITC, Wipro and Mahindra & Mahindra.

Market breadth is very weak. Out of 3,080 stocks traded, 2,531 have declined while 493 have advanced.