Markets trading near day lows

Capital Goods, Financials, Software shares lead the fall

Benchmark share indices were trading near their day lows ahead of expiry of August derivative contracts today with capital goods and financial and software shares leading the decline.

At 1PM, the 30-share Sensex was at 17,401 down 89 points after touching a low of 17,368 and the 50-share Nifty was at 5,265 down 23 points after touching a low of 5,255 so far.

Markets are likely to remain volatile for the remaining part of the trading session with August futures and options series set to expire today as traders roll over positions to the September series.

"Maximum Put OI is at 5200 and Call is at 5500 strike indicating that market is likely to move in between 5200 to 5500 levels as of now. Nifty future has seen Rollover of 55% with a roll cost of 0.60%." says Chandan Taparia, Derivative Analyst, Anand Rathi Financial Services

On the global front, Asian shares hit a one-month low on growth concerns while major currencies were range-bound on Thursday as investors waited to see whether U.S. Federal Reserve Chairman Ben Bernanke will give any hint about further U.S. stimulus in a speech on Friday. The Hang Seng, Nikkei and Straits Times were down 1% each while the Shanghai Composite was marginally down.

Among the sectoral indices on the BSE, the Capital Goods Index was the top loser down 1.3% followed by oil & gas, metal, bankex and auto indices.

Financial shares were down after hopes of a rate cut remained elusive on the back of a hawkish stance by the central bank. HDFC and ICICI Bank were down over 1% each while SBI was down 0.5%

Index heavyweight Reliance Industries witnessed profit taking at higher levels after over 3% gains last week. The stock was down 0.7% at Rs 777.

Capital goods shares were down, ahead of the Apr-Jun GDP numbers due for release on Friday, on worries over continued slowdown in the segment. L&T was down 1.7% while BHEL slipped 1.1%.

Shares of software exporters such as Infosys and TCS were down ahead of the key US economic data due for release on Friday. TCS was down 1.1% while Infosys was marginally down.

Auto shares like Maruti Suzuki, Hero MotoCorp, M&M and Tata Motors have fallen between 0.2-2%. Auto shares have extended yesterday’s losses on concerns that sales growth in August would remain subdued on account of high interest on auto loans and rising fuel prices.

Among other shares, DLF Limited was trading higher by 3% at Rs 197 in otherwise weak market after the country’s largest realty firm decided to end its five-year long association with the Indian Premier League (IPL).

Hindustan Petroleum Corporation Limited (HPCL) has dipped 4% at Rs 299 on turning ex-dividend today. The board of state-owned oil marketing company at its meeting held on May 29, 2012, has recommended a final dividend of Rs 8.50 per share.

The BSE-Mid cap Index and the BSE-Small cap are trading flat. The market breadth remains weak with 1,322 declines and 1,082 gainers.