Volatile markets end in red

Markets ended in the red after turning volatile in the last hour of trade. The Sensex languished on global cues throughout the morning. However, it staged a partial comeback and touched a high of 16,878. Selling pressure in Larsen & Toubro and Reliance dragged the index once again to a low of 16,642. The Sensex finally ended down 107 points at 16,776. Nifty ended down 38 points at 5,030.

Asian markets ended lower on sustained worries of the Euro-zone debt crisis. Italy's benchmark sovereign yield was above the key 7% level. he Bank of Japan cut its economic outlook on Wednesday, citing weaker global conditions, while voting unanimously to keep its interest-rate target at 0-0.1%, as expected. Nikkei slumped 1% to 8,463. Hang Seng and Shanghai Composite dropped over 2% each. Markets in Seoul and Taiwan were also in red.

Meanwhile, India's services exports fell by 5.6% year-on-year to $11.22 billion in September, according to the Reserve Bank of India. The country's total receipts from services exported stood at $11.89 billion in August, RBI data said. Moreover, Export Promotion Council for EOUs and SEZs (EPCES) data showed that exports from special economic zones (SEZs) grew 26.2% year-on-year to Rs 1.76 lakh crore during April-September this fiscal.

In other news, the cabinet has approved foreign direct investment of up to 26% in the pension sector, a government source told Reuters on Wednesday.

Capital goods index slipped 3.8% at 9,812 as more companies came out with muted corporate earnings. The index earlier slipped to a 30-month low of 9,712.

The slowdown in order inflow dragged down the capital goods stocks such as Bharat Heavy Electrical (BHEL), Larsen and Toubro (L&T), Punj Lloyd, Suzlon Energy, Thermax and Crompton Greaves, which plunged more than 5% each.

"Stocks like Larsen & Toubro and BHEL still look weak on the charts. Further 5% fall seems likely at these counters; however, look for shorting opportunity on bounces rather than at current market price," said Somil Mehta, Senior Technical Analyst (Equity), Sharekhan.

BSE power index shed 2% while the oil & gas and IT indices dropped 1% each in trades.

State-owned oil marketing companies (OMCs), including Bharat Petroleum, Hindustan Petroleum and Indian Oil were trading at their 52-week lows after reducing the price of petrol for the first time in 33 months by Rs 1.85 a litre to pass on to the consumer the benefit of a dip in the global crude oil price in the first fortnight of November. BPCL shed 4%, HPCL slipped 5% while IOC dropped 2.5%.

Reliance dropped 1.6% at Rs 849. The company has denied a newspaper report the energy major was in talks to buy a stake in cash-strapped Kingfisher Airlines. Kingfisher was up 14.5% at Rs 25.

HDIL fell 4.5% to Rs 75, extending 22.35% slump in the preceding five trading sessions, after MSCI said it will exclude the stock from the MSCI India Index with effect from 1 December 2011. On the other hand, shares of companies included in MSCI index – Idea Cellular, Power Finance Corporation (PFC) and Bharti Airtel were in limelight on the bourses. Idea and PFC added 4.5% each.

BSE market breadth was fairly negative. Out of 2,942 stocks traded, 1,927 shares declined and 906 shares advanced in trades.