Weak global cues drag markets; banks weigh

Markets continued to trade lower, amid weak global cues, with bank shares falling the most

Benchmark share indices continued to trade lower, amid weak global cues, with bank shares leading the decline on worries that valuations of their bond portfolios took a hit after bond prices eased following RBI's status-quo on key policy rates.

At 1:40PM, the 30-share Sensex was down 80 points at 25,828 and the 50-share Nifty was down 25 points at 7,721.   

The Indian rupee was trading lower at Rs 61.18 compared to its previous close of Rs 60.85 on the back of dollar demand from banks on behalf of overseas investors planning to book profits in Indian capital markets.

Asian markets were trading lower as investors turned cautious and booked profit on worries that the geopolitical tensions between Russia and Ukraine could escalate. The Nikkei ended down 1% at 15,159.79. Among other major markets in the region, Hang Seng, Straits Times and Shanghai Composite were down 0.1-0.3% each.

European markets were also trading weak in early deals as investors shunned risky assets on concerns over the rising tensions between Russia and Ukraine. The CAC-40, DAX and FTSE-100 were down 0.5-0.9% each.

The BSE Bankex was the top loser among the sectoral indices on the BSE followed by Metal, FMCG, Healthcare and Auto indices.

In the financial sector, private banking majors were among the top Sensex losers with ICICI Bank down 1.7%, Axis Bank eased 1%, HDFC Bank dropped 0.5% while state-owned SBI was down 1.2%.

ITC continues to remain under selling pressure on concerns that cigarette volumes could take a hit after the FMCG major hiked cigarette prices by upto 23%. The stock was down 1.3%.

Select auto shares which had recently gained also witnessed profit taking. Tata Motors was down 2% and Maruti Suzuki lost 0.4%.

Other Sensex losers include, Bharti Airtel and ONGC among others.

Infosys was up 2% on reports that the company's former Board members and CFOs recommended an immediate buyback of shares worth Rs 11,200 crore (approx $2 billion) to restore investor confidence in the company's stock.

Capital goods shares which had recently corrected also rebounded on value buying and short covering at lower levels. L&T was up 0.4% and BHEL gained nearly 2%.

Index heavyweight Reliance Industries was up nearly 1%.

Among other shares, Bhushan Steel was locked in lower circuit of 20% at Rs 305, also its 52-week low on National Stock Exchange (NSE), on back of heavy volumes.

Saurashtra Cement was locked in upper circuit for second day in a row, up 20% at Rs 53.40, after reporting nearly six-fold jump in net profit at Rs 15.69 crore for the first quarter (April-June) of current fiscal, on the back of strong realizations. The company had registered a profit of Rs 2.72 crore in the same quarter last year.

The broader markets witnessed a mixed trend with the BSE Mid-cap index down 0.1% and Small-cap index was down 0.5%.

Market breadth was strong with 1,520 gainers and 1,262 losers on the BSE.