Markets extend losses, IT slips

The markets slipped over 2% in the last leg of trade following heavy selling in front-line IT and banking shares as concerns of global growth slowing down weighed on investor sentiment.

The Nifty opened flat, but wilted under selling pressure soon after. The index cracked the 5,000-mark, and touched a low of 4,932 during the last half an hour of trade. The Nifty slipped 112 points, at 4,937 and the Sensex declined 393 points, at 16,447 (provisional).

--------------------------Updated at 15:44 hours

Asian markets plunged on Thursday as investors rushed to lock in profits on worries that global growth may falter. The Japan’s Nikkei, Hong Kong’s Hang Seng and China’s Shanghai Composite declined over 1 % each following losses in exporter shares due to strengthening Yen. European markets followed suit and were trading on a dismal note, FTSE, CAC and DAX are slipped almost 2 % each.

Earlier in the day Morgan Stanley in a note clients said that global economy is dangerously close to a recession and it cut the global growth forecast to 3.9% from 4.2% for 2011-12 on concerns of policy errors in US and Europe and prospects of fiscal tightening in 2012. The foreign brokerage also cut India GDP growth forecast for FY12 from 7.8% to 7.4%  on back of slower demand and also reduced the Sensex target by 15% to 18, 850 levels.

Back home, ICICI Bank, Infosys, HDFC and Reliance Industries accounted for a loss of 160 points on the Sensex. Other prominent losers were Jindal Steel, Sterlite and Wipro, down over 3%.

There were only six components on the Sensex which were trading in the greeb. DLF was up over 4 % at Rs 182.  JP Associates and Hero Motors were up almost 1 % each.

IT stocks were leading the losses on fears of challenging times ahead, the BSE IT index plunged 3.4%.  The spiralling debt crisis in Europe and slowing economic growth in US may weigh on clients spending. From the IT pack, midcap IT companies were the worst hit today, Tech Mahindra fell over 6 %, HCL Technologies and Mphasis declined almost 5 % each.

BSE Banking index was the next worst hit, down 3% on concerns that net interest margins may get further eroded if the RBI were to hike rates in the September policy. Bank of Baroda, IDBI Bank and Axis Bank  plunged around 5 % each.

Market breadth was extremely negative, 1,919 stocks have declined, for 665 stocks advancing on the BSE.