Sensex skids on late selloff...Nifty ends below 4900

Bears were back on Dalal Street on Wednesday, sending the key equity indices down for the first time in three sessions this week. The Indian markets witnessed heavy offloading across the board with the selloff gaining traction in the last one hour or so. Auto, Metals, Banking and Capital Goods stocks were among the major losers. The Mid-Caps and the Small-Caps also ended in the red after outperforming their Large-Cap peers for most part of the day.



Finally, the BSE Sensex ended at 16,284 losing 213 points. It had earlier touched a day's high of 16,533 and a day's low of 16,253. It opened at 16,490. The NSE Nifty closed at 4,888 losing 60 points.

Benchmark indices opened in the green, tracking overnight gains in the US and European markets. However, the sentiment was hit after Asia markets started losing more ground.

Markets in Japan and South Korea lost over 1% each while the Hang Seng tumbled 2%. Chinese market was down 0.5%. Japan shares fell after Moody's cut its debt rating to 'Aa3' from 'Aa2'. The mood remained down despite positive European markets.

The European markets opened with a positive bias and remained higher, extending this week's advance and rising for a third successive session. Earnings announcements helped boost several companies.

The sentiment in India remains jittery following the recent crash across global markets. Also, the concerns about the health of the US and other developed economies have not disappeared, notwithstanding the slight recovery in world equities. All eyes will be on Friday's speech by Federal Reserve chairman Ben S. Bernanke at the Jackson Hole retreat.

"Thursday’s F&O expiry could make the markets a bit more volatile. At the same time, we cannot rule out a short covering led rally.

A bullish confirmation of breakout would only happen if the Nifty ends above 4976. Till then sustainability of any rise will be at risk. From a short-term perspective, 4900 and 5000 are crucial levels to watch,"says Amar Ambani, Head of Research, IIFL - India Private Clients.

Meanwhile, foreign brokerage CLSA has cut its 12-month target for the BSE Sensex to 18,200 from 19,500, as it prefers to stay cautious on the Indian markets until it sees some evidence of investment demand picking up.

"Our portfolio continues to stay defensive," CLSA said in a note issued today.

While the sharp correction in the Indian markets may suggest attractive valuations, the pace of corporate earnings downgrades has intensified in the recent results season, CLSA said.

CLSA lowered FY12 and FY13 Sensex earnings per share (EPS) estimates by 5.6% and 10.6%, respectively since the beginning of the year.

"The pace of downgrades has increased during the recent result season. This also indicates that the there would be more downside to our FY11-13 earnings CAGR of 15%," it added.