The BSE Sensex slipped into the red after a positive start Tuesday. At 09.20 am, it traded 29 points or 0.17% lower at 17,067 while the broader Nifty index declined 13 points to 5,187.
Analysts said investors should be cautious as the Nifty index has retraced to the crucial support levels. "5,135 is the last straw for the bulls. If that is breached, we may have trouble in the short term," Sudhanshu Pandey, senior vice president at FRR said.
"Things aren't very rosy. Markets are likely to be range bound with a negative bias," Vivek Mavani, independent analyst told NDTV Profit.
Earnings continued to be in focus with investors rewarding companies that have met Street estimates in the March quarter.
TCS, India's biggest software exporter, surged over 8% in early trade after Q4 profit rose 1.5% sequentially against expectations of a decline. Other IT stocks - Wipro (2%), which reports earnings tomorrow and HCL Tech (1.6%), which reported higher than expected profits - were among the top Nifty gainers.
Telecom stocks were the worst performers. Telecom regulator Trai's recommendation for auctioning of spectrum is seen as a negative for incumbents such as Bharti (-5.1%), which was the top Nifty loser. Other telecom firms - RCom (-3.1%) and Idea (-8%) also saw selling pressure.
The market breadth was strong with nearly 60% stocks rising on the broader BSE 500 index, indicating a positive bias in mid cap and small cap stocks.
Meanwhile, global cues continued to be negative. Asian markets mostly traded lower. Japan's Nikkei index was down -1.2%. Overnight, the Dow Jones index declined 102 points to slip below the 13,000 mark.
Investors were worried about possible political changes in France and other European countries, which could be against austerity measures.
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