Markets erase all the gains, IT shares weigh

The markets gave up all the gains and were trading flat in afternoon trades. The Nifty was trading at 5,983, down 1 point and Sensex was at 15,568, up 11 points.

The Nifty opened on an upbeat note and scaled to a high of 5,040 in the morning session. However, the index was unable to cross the 5,050 resistance and succumbed to profit booking following weak opening in Europe. Investors also turned cautious ahead of the IT bellwether-Infosys’ results tomorrow.

Markets in Asia rallied after Chinese state run investment bank bought shares in four big banks to help stabilize China's Banking system. The Hang Seng index rallied over 2% and the Shanghai Composite ended marginally higher and Japan's benchmark Nikkei average closed up 2%.

European markets were trading weak as investors’ waited for the decision by Slovakia for expansion of the European rescue fund. The CAC and FTSE declined almost 1% each, while the DAX was off 0.6%.

Back in India, corporate performance in the second quarter is expected to moderate due to input cost pressures and 12 rate hikes by the RBI since March 2010. “We expect Sensex earnings toslump to a two-year low of 7.5% on the back of weak earnings momentum in metals,” said IDFC Securities in their earnings preview.

Major losers on the Sensex were Infosys, down almost 4% ahead of first quarter results; TCS and ICICI Bank declined 1-2% each. Prominent gainers on the Sensex were Bharti Airtel and Jindal Steel, up over 3% each.

Besides the IT shares, capital goods stocks were also leading the losses. Major losers include Usha Martin, Areva T&D and BEML, down around 1% each.

Market breadth was positive 1469 stocks were advancing for 1163 declining shares.