Markets slide further on China woes; Re drops

Markets edged lower in the late-morning session this Monday on back of selling pressure witnessed in realty and consumer durable sectors.

Foreigners pulled a net $358 million from domestic shares on June 20, the highest since August 9, 2011, data released by the market regulator showed.

At 11:20AM, the 30-share Sensex dropped 166 points at 18,608 and the 50-share Nifty declined 57 points at 5,610 levels.

The rupee weakened on Monday, hovering near a record low hit last week, as worries about China's economic and financial stability hit global risk assets, while caution prevailed ahead of current account deficit data due this week.

India is due to report January-March current account deficit data on Friday. The country's deficit has been a key source of stress on the rupee.

The rupee fell by 40 paise to 59.67 in early trade on the Interbank Foreign Exchange market, on fresh dollar demand, tracking strengthening of the US currency overseas.

Global investor sentiments remained edgy after Federal Reserve Chairman Ben Bernanke hinted towards tapering off the bond-buying programme popularly known as ‘quantitative easing’ sooner-than-expected once US economy shows sustainable signs of recovery.

The Fed may trim its monthly bond purchases by $20 billion to $65 billion in September, a Bloomberg survey showed.

Meanwhile, Goldman Sachs lowered its estimate for 2013 Chinese gross domestic product to 7.4 percent from 7.8 percent, citing weaker economic indicators and tightening of financial conditions.

Mirroring the concerns, Asian stocks traded lower with Nikkei fell 1.3% to 13,052, Singapore Straits Times declined 0.8% to 3,098, Hong Kong’s Hang Seng declined 2% to 19,863 while China’s Shanghai Composite index was down 3.7% at 1,998.

Back home, all the key sectoral indices declined with realty, consumer durables, capital goods, banks leading drop on the BSE.

Bank stocks declined on worries that the rising rupee would force the Reserve Bank of India to defer reduction in key policy rate going forward.

The laggards were GAIL and BHEL shedding 3% and 2.5% respectively, Bajaj Auto was down 2.4%, Larsen & Toubro dropped 2.2%, Infosys fell 2% on the BSE.

The gainers included counters such as Hindalco Industries and Tata Steel gaining 1.4% and 1% respectively, ITC rose 0.6%, TCS added 0.4% on the BSE.

The key notable movers included companies engaged in gems and jewellery business which are under pressure on the bourses and trading lower by up to 20% on , on concerns that the Reserve Bank of India's and government initiative to curb gold imports may impact the sectors' growth.

Gitanjali Gems, Tribhovandas Bhimji Zaveri (TBZ), PC Jeweller and Shree Ganesh Jewellery House are down in the range of 6-20% on the Bombay Stock Exchange.

Jindal Steel and Power Limited (JSPL) has dipped 5% to Rs 194 in early morning deals on BSE, on reports that the Central Bureau of Investigation (CBI) questioned the promoter Naveen Jindal in connection with its FIR against him and his company for alleged cheating while applying for coal block.

The broader markets traded negatively with mid-caps and small-caps falling 1-1.5 per cent on the BSE.

The market breadth was negative. Out of 1,775 stocks traded so far, 1,103 stocks declined while 556 advanced on the BSE.