Markets plunge 2% on global worries

Volatile markets slumped in late noon trades to end near the day's low with Sensex and the Nifty down 2% each. Selling pressure was seen in realty and oil stocks today.

The Sensex, after opening with a positive gap, dropped into red as heavyweight Reliance declined. A probable rate hike in China had been the cause of worry for investors. The index, thereafter, started to recover. However, the recovery was short-lived and selling accentuated in the last one hour of trades owing to the weekend factor. Given the global uncertainities and political drama in India following the 2G scam, traders opted to unwind ahead of the weekend. The index dropped sharply to touch a low of 19,504. The Sensex finally ended at 19,585 - down 345 points.

The NSE Nifty ended at 5,890 - down 109 points.

Markets have been trading with a negative bias for the past couple of session. Yesterday the Nifty fell in morning trades. The index, helped by a late recovery, had ended up 10 points at 5,999.

"We believe this is part of the normal correction process and the medium-to-long term uptrend remains intact. We have always maintained that any knee-jerk short-term correction in markets as response to global events should be looked at as an opportunity to accumulate quality stocks", says Gaurav Dua, Head-Research, Sharekhan.

BSE mid and small cap indices also slipped. The mid-cap index underperformed and was down 1%.

Asian markets ended in the green. Seoul Composite added 0.7% to 1,940. Shanghai Composite advanced 1%. Jakarta was up 1% at 3,725.

European markets, however, are weak owing to continued worries about Ireland's debt. The FTSE is down 0.5%, while CAC is down 0.3% in trades.

BSE realty index has plunged over 3% to 3,200. Oil & gas, metal, Bankex have shed 1-2% each.

Telecom Regulatory Authority of India (Trai) advised the government to cancel 69 of the 127 licenses given to six companies including Etisalat DB (earlier known as Swan Telecom), Uninor (Unitech), Videocon (Datacom), Loop Telecom and Aircel. Following the reports, stocks fell. Videocon plunged 9% to Rs 217. Reliance Communications shed 3.5% at Rs 148. Unitech dropped 4.5% in trades.

However, Bharti Airtel added 1.2% to Rs 329 after the company unveiled its new logo as it crossed the significant milestone of 200 million customers. The telecom giant has launched the new logo in 19 countries across the African and Asian continent.

Corporate earnings had seen the Sensex surge to its highest closing on November 5, 2010. However, the previous week the markets dropped 8% in five trading sessions.

"The 2Q FY11 results surprised on topline growth (+20% YoY) and were broadly in line with our expectation for PAT growth (+13% YoY) for our coverage universe ex-Oil & Gas. As expected, overall margins declined (by 200bps) on a YoY basis on high input cost pressures, but strong demand, coupled with price hikes in some sectors, helped cushion a further decline in margins," says a Macquarie Securities research.

Market heavyweight, Reliance was the biggest dragger today and slumped 3.5% to Rs 997. SBI and Infosys contributed over 50 points to the fall today.

Reliance Infrastructure shed 5% to Rs 945. Hindalco, Wipro, DLF, Mahinda & Mahindra and Cipla were down over 3.5% each. Tata Motors and Tata Steel shed % each to rs 1,190and Rs 605, respectively.

Jaiprakash Associates, BHEL, SBI, TCS, ACC and HDFC bank were some of the other major losers.

However, Hero Honda added 1.7% to Rs 1,946.

In other news, HCC's Lavasa Corporation got SEBI nod for an IPO. The company plans to raise funds for construction of a township in Maharashtra. The company intends to sell fresh shares amounting to 10% of the post-issue equity capital. HCC pared morning gains and ended down 3% at Rs 56.

State-owned Indian Oil Corporation today said it expects to launch its follow-on public offer in the third or fourth week of January. This comes after the strong response state-run Power Grid Corporation's FPO received recently. The government on Thursday had announced that Manganese Ore India (MOIL) will come out with its IPO on November 26.

BSE market breadth was extremely weak. Out of 3,109 stocks traded, 2,284 declined while 695 advanced in today's trade.