Markets continue weak trades, Mahindra Satyam slips 5%

Markets continue to trade lower after the gap down opening due to weakness in banking and metal shares. The S&P CNX Nifty was down 56 points, at 5,425 and the Sensex declined 167 points, at 18,165.

Among individual stocks Mahindra Satyam slipped 5% to Rs 73 after it reported net loss of Rs 327 crore in fourth quarter against the profit of Rs 58.9 crore in third quarter.

The BSE Bankex index was also witnessed selling pressure in the morning trades, down 2%. HDFC Bank and ICICI Bank slipped over 2% each and Axis Bank was off 1.5%.

Metal shares were seeing weak following reports of prosecution against the mining major Sesa Goa by SFOI (Serious Fraud Investigation Office), a corporate fraud Investigation body for underinvoicing export and import of Rs 1000 crore. Sesa Goa was down over 4%, Jindal Saw declined 3.8% and Sterlite Industries was down 2.1%.

--------------------------------- Updated at 09:40 hrs

Markets opened gap down led by sell-off across Asia and weakness ahead of derivatives expiry this week. The S&P CNX Nifty was down 57 points, at 5,427 and the Sensex declined 167 points, at 18,161.

Analysts said in absence of any major domestic cues, markets will look up to global cues and futures and options expiry of May series. Market men expect volatility to spike up as traders shuffle their positions from May to June series.  The India Volatility Index (VIX), a measure of near term risks which option traders perceive moved in the range of 18-22 in the past week. The VIX was down 2.6% at 18.9 in the morning session.

Technical analysts expect markets to remain weak in the short term. Edelweiss in the morning note said, “for the fourth consecutive week last week the index saw a negative trend as it makes lower tops and bottoms. The Momentum oscillators on the weekly chart have given a sell signal, whereas the short-term oscillators have rolled bullish.” Edelweiss expected a quick dash higher towards 5500-5550 where selling is likely to emerge.

Investors will closely watch data from United States such as home sales, jobless claims and consumer sentiment reports as the Federal Reserve is expected to end quantitative easing part two in June.

Meanwhile, the FII activity continues to remain subdued as they have been net sellers of Rs 5,140 crore ($1.1 billion) so far this month.

Asian markets were also trading lower in the morning session dragged down by auto makers and resource shares. The Nikkei Stock Average slipped 1.4% led by losses in banking shares. Hong Kong's Hang Seng plummeted 1.6% due to across the board sell-off and weakness in property shares. China's Shanghai Composite index was down 1.1%.

BSE FMCG was the top gainer on account of buying and expectations of good monsoon which may boost demand for the fast moving consumer goods. Marico declined 1.3%, United Spirits was off 0.8%, and Hindustan Unilever was off 0.7%.

Only three components on Sensex were trading in the green, ITC and BHEL advanced 0.7%. Bharti Airtel was off 0.05%.  Among the losses, HDFC dropped 2.2%, Jaiprakash Associates declined 1.9% and HDFC Bank was down 1.9%.

BSE smallcap and midcap indices were down 0.5% and 0.3% each. Market breadth was negative, 466 stocks declined for 902 stocks which advanced.