Markets remain weak led by financial shares

Benchmark indices continue to trade lower weighed down by Asian markets, along with financials leading the downfall. Markets have slumped further on worries that the liquidity squeeze would hurt growth going forward and impact equity inflows.

At 13:10 PM, the 30-share Sensex declined 234 points at 19,799 and the 50-share Nifty shed 85 points at 5,946 levels.

According to Ranak Merchant, technical analyst - strategies, Sushil Financial Services. “Yesterday's upmove saw Nifty inch closer to our short term trading target of 6070. We had advised clients to take some profits off the table. Today's move has breached the previous two weeks patterns of a higher top and bottom and therefore 5980 would be watched on closing basis for next 2-3 sessions.”

On the global front, Asian shares traded mixed. Japan’s Nikkei gained 0.5% to 14,578, Singapore Straits Times declined 0.3% to 3,227, China’s Shanghai Composite index was down 0.2% at 2,054 while Hong Kong’s Hang Seng gained 0.1% to 21,335 today.

International rating agency, Moody's, has revised its outlook on Singapore's banking system from "stable" to "negative", expressing concern with the debt level rising in the city state, according to a media report.

Back home, the Reserve Bank's measures to tackle rupee volatility is likely to provide only "some short- term relief" to the currency and it is likely to trade around 59 per US dollar by this year-end, says an HSBC report.  

Surrendering some of its early gains, the rupee was trading higher by 45 paise to 59.44 on dollar selling by banks after the Reserve Bank announced a slew of measures to arrest the local currency's fall against the greenback.

On the sectoral front, BSE Realty index has slumped by nearly 6% followed by counters like Banks, Capital Goods, Metal, Auto and Consumer Durables, all declining between 1-5%.

Banking and non-banking financial companies (NBFC) shares are under pressure in opening deals on the bourses after the Reserve Bank of India (RBI) has hiked the Marginal Standing Facility (MSF) by 200bp to tackle liquidity in the system to shore up the currency.

Market analysts said that an interest-rate cut in the RBI policy review later this month looks unlikely for now.

ICICI Bank, HDFC, SBI and HDFC Bank have declined between 2-6%.

Other notable losers are Sterlite, L&T, Dr Reddy’s Lab, JSPL, Maruti Suzuki and Hero Moto.

Among other shares, Financial Technologies (India) is trading lower by 4% to Rs 707, extending its previous day’s 4% fall, after the company said the consumer affairs department has sought an undertaking from its subsidiary National Spot Exchange Limited (NSEL) that no further contracts will be launched and all existing contracts should be settled on their due dates.

Ashok Leyland has dipped 5% to Rs 16.55 ahead of its April-June (Q1FY14) quarter earnings today.

The market breadth in BSE remains weak with 1,307 shares declining and 95 shares advancing.