Domestic markets yet again failed to get the equations right with investors, sending the Nifty below the psychological 5,000 mark. The spark set off by gloomy world markets caught flame as the day progressed and investors indulged in profit booking on worries over the pace of economic recovery and ambiguity in markets' direction. Pessimism dominated the session such that benchmarks did not make the grade to even have a sight of the green lane. Second-line shares that managed to dodge sellers at a point in morning trades, finally found it difficult to carry on the feat due to intensive selling activity taken up by all sections of investors. Realty, banking, metal and technology stocks were worst hit in the day's trade; in fact, none of the sectoral counters showed nerve to fight the brutal force of sellers. Finally, the 30-share BSE Sensex dropped 213.13 points or 1.25% to end at 16,785.65, while the S&P CNX Nifty plunged 65.70 points or 1.3% to settle at 4989.

The US markets continued to trade in subdued mood on mixed economic data. It was the concern of economic recovery that led investors out of stocks and all the major indices declined by about 1%.The Chicago Board Options Exchange's Volatility Index rose more than 4%, it is considered as the Wall Street's fear gauge, also the figures from the Labor Department indicated that employers are still shedding jobs. The Dow Jones Industrial Average lost 93.87, or 0.90%, to 10,332.44. The broader Standard & Poor's 500 index fell 14.90 points, or 1.34%, to 1,094.90, while the Nasdaq composite index closed lower by 36.32 points, or 1.66%, to 2,156.82.

Crude prices witnessed a sharp decline on Thursday as the equity markets plunged world wide and the dollar strengthened. The crude prices were rising steadily as the dollar lost value against the euro. The Energy Information Administration reported that natural gas stockpiles rose to a new record high last week. Benchmark crude for December delivery gave up $2.12 to settle at $77.46 a barrel with one day remaining for the contract on the New York Mercantile Exchange. In London, Brent crude for January delivery dropped $2.29 to $77.18 on the ICE Futures exchange.

The Indian rupee declined again on Thursday after a brief recovery in the previous session. Tracking the losses in the regional stock markets the rupee made a weak start and when the local stock markets too turned weak the rupee lost its strength. The rupees closed at 46.68, 46 paise weaker compared to its Wednesday's close of 46.22. The buzz that authorities may be looking at steps to temper surging capital inflows and the strength in dollar too weighed on the sentiments of domestic currency, the dollar rose against other major currencies overseas.

The FII on Thursday were the net buyers in the equity segment with gross buying of Rs 2586.00 crore against gross sell of Rs 2063.70 crore, while in the debt segment they were the net sellers with a gross purchase of Rs 275.10 crore against gross sales of Rs 430.00 crore.

The US markets declined on the concerns of subdued economic recovery, the mixed economic signals made the investors cautious that the long betted recovery might not be so near. The Asian markets have made a weak opening with most of the indices trading in red, giving a cue of soft start for the domestic markets. The local indices went in consolidation mood in previous trading; the strength in rupee due to continuous foreign capital inflow is being seen as the weak point cutting exporters' profitability. The start of the markets is likely to be weak though some stability can be expected in later hours.

Support and Resistance: S&P CNX Nifty and BSE Sensex

                                                             Nifty Top volumes

• Suzlon Energy will sale its 35% stake in the Belgian company, Hansen Transmissions International NV, Belgium.
• Hindalco Industries has received approval from its shareholders for raising funds up to Rs 2,900 crore through issuing securities.
• JP Associates is planning to raise Rs 2500-3000 crore via Initial Public Offering of its infrastructure arm, Jaypee Infra.
• Tata Steel is raising its annual iron ore production by 55% to 17 million tonnes in India over the next two years.
• NTPC and BHEL have started a joint venture Company in the name of NTPC-BHEL Power Projects (NBPPL) with 50:50 equity contributions.