Markets end at two-month lows, ITC, L&T drag

Broader markets underperform; Realty, consumer durables, capital goods among key losers

Markets ended lower on Monday and the rupee continued to remain weak after the US Fed's decision to gradually reduce its monetary stimulus measures raised worries of outflows by foreign funds. Further, the sharp plunge in China's Shanghai Composite also weighed on market sentiment. The Sensex finally ended down 233 points at 18,541. Nifty ended down 77 points at 5,590. The NSE benchmark breached 5,600 for the first time since April 16, 2013

Meanwhile, India VIX crossed 21 for the first time since June 26, 2012 today. The market may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near month June series to July series.

"On downside, 5600 put is holding maximum OI for the current months, we believe markets to take support near 5580-5600 zone for the current series. We are looking expiry for the june series near 5700 zone. So some short covering bounce is visible in next few sessions," said Navneet Daga, Derivative Analyst, KR Choksey Securities.

Foreign Institutional Investors sold shares worth Rs 1,769 crore, as per the provisional data on the BSE.

Broader markets declined even more, underperforming the benchmark index this afternoon. BSE mid-cap index slipped 2.5% at 5883 while the small-cap index was down 2% at 5,593.

In Asia, China shares suffered their worst daily loss in almost four years on Monday, taking Hong Kong markets lower, with financials hammered on fears that the central bank would keep money tight and economic growth could slow sharply. Japan's Nikkei share average fell on Monday in choppy trade as worries about Chinese economic and financial stability soured investor sentiment, dragging down China-related stocks such as construction equipment makers and some exporters. Global risk appetite was frail on concerns cash crunch will hurt growth recovery in China, world's second-biggest economy. Meanwhile, Goldman Sachs cut its estimate for expansion in China’s 2013 gross domestic product to 7.4% from 7.8%, citing weaker economic indicators and tightening of financial conditions.

The rupee came under renewed pressure against the dollar and traded at 59.81 in noon deals. Global brokerage firm Standard Chartered today lowered rupee forecast for the year end to 60.5 from 53 on the back of continued strength in US dollar, persistent outflows from Indian markets and low probability of strong policy measures to stem rupee losses.

All the sectoral indices were in the red this afternoon, with the losses being led by the BSE realty index. The index was down 4.7% at 1,438.

Consumer durables and capital goods indices were down 2-3% each, followed by PSU and FMCG index.

Shares of oil exploration firms declined as crude oil prices fell. Lower crude oil prices would result in lower realizations from crude sales for oil exploration firms.

The Reserve Bank of India on Friday, 21 June 2013, reduced the risk weightage on home loans and residential housing projects. RBI said the risk weightage on housing loans up to Rs 75 lakh has been brought down to 50% from the earlier requirement of 75%. Banking majors - ICICI Bank and HDFC added 0.5% each.

Sterlite India slipped 4% at Rs 77.45. BHEL shed 3% to touch its 52-week low. ONGC, Larsen & Toubro and ITC were down 2-3% each.

On the other hand, Jindal Steel added 1.4%, followed by Hindalco. Tata Power was up 0.6% at Rs 82 The company has decided to shift the location of its 2000 Mw coal-based power plant in the state from Naraj in Cuttack district to Begunia in Khurda district.

BSE auto index was down 1.5% at 10,483.  According to industry bodies Society of Indian Automobile Manufacturers (SIAM) and Automotive Component Manufacturers Association of India (ACMA), with demand continuing to be low and factories not operating at full scale, this may lead to temporary excess overheads.

Shares of Jaypee Group all three listed companies such as Jaiprakash Associates, Jaiprakash Power Ventures and Jaypee Infratech are trading at their 52-week lows on reports that Jaypee Cement has shelved the plan to sell its Gujarat unit as it did not get the “right” price.

BSE market breadth was extremely weak. Out of 2,400 stocks traded, 1,635 shares declined while 651 shares advanced.