Sensex erases early gains on monsoon worries; up 27 pts

After climbing to a 10-week high of 17,526.82 in the first hour of trade, the BSE benchmark index pared most gains and closed barely 26.73 points higher or 0.15 per cent.

Among the 30-share Sensex, 16 stocks including Bharti Airtel, Hindalco, HDFC and Coal India ended higher while 14 scrips including BHEL, Jindal Steel, TCS and ITC dropped.

Brokers said sentiment in the morning improved on fresh capital inflow after rupee rose to a 1-month high of 54.86.

However, monsoon worries surfaced again with Agriculture Minister Sharad Pawar saying monsoon rains have been 31 per cent below average up to July 2.

"The morning cheer was short-lived and during the day, markets gave up most gains. Stock specific action continued with telecom stocks going up and FMCG shares going down," said Milan Bavishi, Head Equity, Inventure Growth and Securities.

FMCG sector which gets a boost in sales with a good monsoon helping rural India saw selling emerge for the second straighjt day as ITC and HUL shares shed over 1 per cent each.

IT majors TCS and Infosys ended lower today after brokerage Macquarie yesterday downgraded domestic IT sector.

The gains in Sensex were supported by a rise in telecom stocks amid reports that existing players may not have to pay auctioned arrived price for spectrum while TDSAT's split verdict on 3G intra-circle roaming case also helped.

In the realty pack, DLF with 4.3 per cent rise led gains.

Similarly, the 50-share National Stock Exchange index Nifty closed 9.35 points up at 5,287.95.

Globally, Asian stocks ended higher on hopes that central banks in the US and Europe may ease monetary policy to spur economic growth. European indices were also trading higher in early trade. (MORE)