The markets ended a choppy session in red on back of weakness in banking and realty stocks.The Sensex opened flat and traded within 200 points range before closing at 19,935 - down 47 points. The S&P CNX Nifty was down 16 points at 5977.
The BSE mid-cap and small-cap indices were down 1% and 1.7% each. Market breadth was negative 2037 stocks which declined for 881 stocks which advanced.
Markets will remain muted in December due to subdued FII activity. Nirmal Jain, Chairman, IIFL said, "from Thanksgiving to Christmas, there is more of a holiday mood in the US. FII activity will pick up in the month of January. So, if the peak has to be attained it is more likely in the next quarter."
Concerns over China tightening resurfaced in Asia after media reports that China may hike rates again this weekend. China's Shanghai Composite Index rose 0.7%, Hong Kong's Hang Seng Index was up 0.8%, Japan's Nikkei Stock Average was off 0.3%, and South Korea's Seoul Composite advanced 0.5%.
In Europe, markets were trading marginally higher, with all eyes on the Irish budget vote.
Back in India, markets shrugged-off GDP growth forecast revision news.
The GDP was revised to 8.75-9% for FY11 from 8.5% earlier backed by high investment and strong domestic demand. The government also expects the fiscal deficit around the budgeted range of 5.5% of GDP for this financial year.
Investors have taken short positions in frontline and mid-cap banking stocks. Siddharth Bhamre, Head - Equity derivatives said," there has been some apprehensions margin squeeze as deposit rates have gone up while lending rates have remain unchanged.
Also sudden spike in 10 year bond yield fueled concerns over
bond losses." Top lender State Bank of India fell 2.3%, ICICI Bank has dipped 3.5%, Others such as Union Bank, Bank of India, Yes Bank, Axis Bank and IDBI Bank fell between 4-5%.
Additionally, CNBC reported that Ramsarup Industry (steel wire manufacturers) has Rs 1,800 crore (Rs 18 billion) of debt to restructure due to delayed project completion and some of the banks may be exposed the company put further selling pressure on the stocks.
Bhamre does not expect the quantum of fall for banking stocks to be huge, hence if investors are already short, he has advised to sell out of money puts or buy at the money calls.
Unitech from the realty space bucked trend, the stock surged over 5% to Rs 66. However, profit booking was witnessed in other realty stocks; DB Realty declined 4%, Indiabulls Real Estate also dipped 4.5% and Parsvnath Developers lost 3.2%.
Oil & Gas index was the top gainer on the sectoral charts for the secon day, up 0.9%.
The movers in this space were market heavyweight Reliance Industries, Oil India, and ONGC, up almost 1% each.
Siddharth Bhmare said, "call writing in ONGC has been successful. Diesel price hike is now given, but this will not materially impact OMC's in an incremental positive way as crude is close to $90/bbl."
Top losers on the Sensex were ICICI Bank, SBI, DLF and JP Associates (down 1.9%).
Prominent gainers were Hindalco (up 2.5%), NTPC (up 2.2%), and Martui Suzuki (up 1.6%).
