Nifty facing resistance above 8,800; Asian Paints down 5%

Markets continued to trade with negative bias in late morning trades with bank shares leading the decline amid asset quality concerns of select banks along with FMCG majors.

At 11:30AM, the 30-share Sensex was down 124 points at 29,059 mark and the Nifty slipped 28 points to 8,781.

Growth in India's factory activity slipped in January from December's two-year high as new orders rose at a weaker rate despite factories keeping price increases to a minimum, a private business survey showed on Monday.

The HSBC Manufacturing Purchasing Managers' Index (PMI), compiled by Markit, fell to a three-month low of 52.9 in January from December's two-year high of 54.5.

Meanwhile, foreign portfolio investors were net sellers in equities to the tune of Rs 771.55 crore on Friday, as per provisional stock exchange data.

The Indian rupee rebounded from early lows was trading higher at 61.80 per dollar versus Friday's closing value of 61.86 a dollar.

Most Asian markets were trading weak after the latest gauge of China's factory sector activity raised concerns about the world's second-largest economy.

The final HSBC/Markit Purchasing Managers' Index (PMI) for January came in at 49.7 on a seasonally adjusted basis, just below the 50.0 level that separates growth from contraction. The figure released on Monday was slightly lower than a preliminary "flash" reading of 49.8.

China's benchmark Shanghai Composite was the top loser in the region down 1.4% while Hang seng was down 0.4%. Japan's benchmark Nikkei was down 0.7% and Singapore's Straits Times was up 0.4%.

BSE Bankex was the top sectoral loser down 0.9% followed by FMCG,Oil and Gas indices. On the gaining side, IT index was the top gainer up 1.1% followed by Capital Goods, Healthcare and Auto indices.

Financial shares weakened amid asset quality concerns of select banks such as ICICI Bank and Bank of Baroda while traders remained cautious ahead of the RBI monetary policy due tomorrow. ICICI Bank, HDFC Bank, HDFC and SBI are down between 0.3-2%. Bank of Baroda was down 3.2%.

ICICI bank has extended Friday’s losses and are trading lower by 2% after the bank said that its net non performing assets (NPA) for the quarter ended December 2014 (Q3) stood at 1.27% against 1.09% in September quarter.

Among other banks, HDFC Bank and SBI are down between 0.3-2% while Bank of Baroda was down 3.2%. Mortgage lender HDFC was down 0.6%.

Asian Paints was down over 5% after a weak performance of the decorative paints segment (about 80% of consolidated revenues and 90% of profits) and mixed growth trends in international business led to a dismal show by Asian Paints in the December 2014 quarter.

Dr Reddy’s Laboratories has extended losses after Credit Suisse downgraded teh stock to "neutral" from "outperform". The stock is down over 2%.

Bajaj Auto has slipped 2% after the company reported 9% year-on-year (y-o-y) decline in total sales at 288,746 units in January 2015 as compared to 318,171 units in January 2014.

Coal India recovered from its early lows and was down 1.8% after the government raised Rs 22,557.63 crore from the sale of its 10 per cent shareholding in Coal India.

Other top Sensex losers include FMCG majors, ITC and Hindustan Unilever among others.

On the gaining side, Sun Pharmaceutical Industries and Ranbaxy Laboratories have touched their respective record highs on the bourses after the Sun Pharma received US Federal Trade Commission (FTC) clearance for Ranbaxy's acquisition.

Shares of Sun Pharma are up 2.9% at Rs 935 on the NSE. The stock hit a record high of Rs 944 so far. Ranbaxy Laboratories, on the other hand, has rallied nearly 4% at Rs 729, also its new high on NSE.

Engineering major L&T, along with IT majors TCS, Wipro and Infosys were among the top Sensex gainers.

Among other shares, Siemens rallied 4% in an otherwise weak market after the company said its operating profit margin expanded by 270 bps to 6.1% for the quarter ended December 31, 2014 (Q1) quarter against 3.4% in the same quarter last year.

The broader market outperformed the benchmark indices with the BSE Mid-cap and Small-cap indices up nearly 1% each.

Market breadth was strong with 1,454 gainers and 919 losers on the BSE.