Markets on shaky ground, Sensex sheds 200 points

The markets have lost further ground in mid-day trades. The Sensex is at 16,616, weaker by 223 points and the Nifty is at 4990, down 65 points.

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(Updated at 0945 am)

The markets opened on a flat note tracking subdued Asian markets, and soon slipped into the red due to selling in IT and banking shares. The Nifty has declined 20 points, to 5,037, and the Sensex dipped 73 points, at 16,767 in the morning session.

Markets in Asia were trading lower as exporter shares were hurt due to stronger Yen. Hong Kong’s Hang Seng declined 0.1%, China’s Shanghai Composite declined 0.5% and Japan’s Nikkei Stock Average was down 0.4%.

Overnight US markets eked out marginal gains on anticipation of upbeat earnings from retailers; however concerns over concrete solution to European debt woes capped gains. The Dow Jones Industrial Average inched up 0.04%, the Standard & Poor's 500-stock index gained 0.1% and Nasdaq Composite fell 0.5%.

Brokerages such as Morgan Stanley cut global growth and India GDP forecast from 7.4% to 7.2% for FY12. Morgan Stanley said, "India may not be able to respond, given the starting point of a high fiscal deficit. The government may focus more on boosting private sector confidence through policy reform.”

Going forward Indian markets may continue to see more pain and analysts expect another correction which take Sensex to 15K levels. Ajay Parmar, Head of Institutional Research from Emkay Global Financial Services said that around 15,300 levels would be an ideal bottom for the Sensex as margin contraction and a dip in volume would be seen in the coming quarters. Eleven consecutive rate hikes since March 2010 may dent demand going forward.

Among the sectoral indices, BSE IT index is at 5,100 and BSE Bankex is at 11,312, both down 1% each. Wipro, MphasiS, Infosys and HCL Technologies are the top losers among the IT pack, down 1-2% each.

Axis Bank, IDBI Bank, Yes Bank and Bank of India, down 1-2% each, are the top losers among from the BSE Bankex index.

From the individual stocks, Coal India is up 1% at Rs 401 after it was proclaimed as the country's largest company in terms of market capitalisation. This is the first time since 2007 that a public sector entity has occupied the top slot on the bourses.

DLF has bounced back at Rs 181, up 2%, after having touched its 28-month low yesterday on reports that the Competition Commission of India (CCI) has imposed a penalty of Rs 630 crore for abusing of market dominance and unfair trade practices. The realty giant has said that the company was exploring all options, including challenging the order before Competition Appellate Tribunal.