Markets trim losses, IT and bankex weigh

Markets opened flat and succumbed to profit booking on back of losses in IT and banking shares. However, in the mid morning session markets trimmed losses, the Nifty was down 20 points, at 5,896 after hitting a low of 5868 and Sensex was off 47 points, at 19,636 at 11:30 hours.

Derivatives data indicated weakness in the markets after past 10 days of rally. Shshank Mehta, Derivatives Strategist at Nirmal Bang said, "We expect selling pressure in the coming days, and market may take support at 5865 and 5800." Based on the derivatives data Mehta expects profit booking in banks especially Axis Bank and HDFC Bank.

Rate sensitive banking stocks were leading the losses on concerns that higher inflation may lead to rate tightening going forward. The BSE Bankex index was down 0.9%. Union Bank was the top loser, down 1.7%, Kotak Mahindra Bank declined 1.1% and HDFC Bank was off 0.9%.

IT shares were also leading the losses due to strengthening Rupee. The Rupee touched a fresh five month high of Rs 44.27 per Dollar this morning which may dampen the repatriated earnings of the IT companies. BSE IT index was down 0.8%. Wipro was the top loser, down 1.8%, TCS was off 1% and Infosys declined 0.6%.

The broader markets were trading flat, the midcap and smallcap indices were up 0.04% and 0.3% each.

Top losers on the Sensex were Hindalco Industries, down 1.2%, Bharti Airtel declined 1.1% and HDFC Bank fell 1%. Top gainers were Reliance Communication, up 2%, BHEL advanced 1.6% and Sterlite Industries added 1.1%.

Market breadth was negative, 1472 stocks advanced for 1109 stocks which declined.