Markets come off two-month highs; Nifty ends below 8,250; IT stocks drag

The BSE Midcap also cut all its intraday gains to shed 0.3% at close

The benchmark indices pared all their intraday gains to settle lower as a slump in IT stocks on worries over H-1B visas and negative trend seen in European markets affected sentiment. 

The S&P BSE Sensex and the Nifty50 reversed direction soon after hitting their highest intraday level in almost two months in mid-morning trade. 

The Sensex settled at 26,759, down 119 points, and the Nifty ended at 8,243, down 30 points. 

The BSE Midcap also cut all its gains to shed 0.3% at close. The index had risen as much as 0.7% in intraday trade. The BSE Smallcap finished 0.4% lower.   

The market breadth, indicating the overall health of the market, remained negative. On BSE, 1,509 shares fell and 1,217 shares rose. A total of 167 shares remained unchanged.

"Stocks continued the week long surge, but with Q3 figures expected to flow in shortly, and with IT stocks bogged down by US visa restrictions fears, profit booking gained traction as the day drew to a close," said Anand James, Chief Market Strategist, Geojit BNP Paribas Financial Services.

Sectors and stocks

IT stocks were among the biggest losers as two US lawmakers reintroduced a bill to curb the use of H-1B visas, including requiring employers to pay more for workers under the system.

The Nifty IT index fell 2.8%, led by losses in Mindtree (down 5.3% to Rs 496) and Tech Mahindra (down 4% to Rs 469). IT majors TCS and Infosys were the two leading losers on Sensex and tanked 2% each on the BSE.

Snapping eight sessions long gaining spree, the Nifty Realty index shed 0.9%, led by losses in Oberoi Realty and Godrej Properties which declined up to 3%. 

But financials supported the index most with the NSE Bank index gaining as much as 1.16%. YES Bank, Kotak Bank and Bank of Baroda rose between 2-3%.

Among other gainers, Wockhardt surged 5% to Rs 708 on the BSE after the drug firm said German regulator has issued European Union Good Manufacturing Practice (EU GMP) certificate to the company's Ankaleshwar facility in Gujarat.

Natco Pharma has moved higher by 4.3% to Rs 623 on the BSE in intra-day trade after the company said it has received final approval from US Food and Drug Administration (USFDA) for Bendamustine injection.

Shares of jute & jute product companies such as Ludlow Jute & Specialities, Cheviot Company and Gloster rallied by up to 20% on the BSE after the government imposed anti-dumping duty on jute from Bangladesh and Nepal.

Global markets

European markets were trading lower. The pan-European STOXX 600 index slipped 0.4% following a drop in commodity-related stocks. FTSE 100 was down 0.1%, while CAC 40 shed 0.4%. Among Asian markets, China's Shanghai Composite and Japan's Nikkei ended 0.3% each, while Hong Kong's Hang Seng index added 0.2%. 

Meanwhile, investors awaited US Nonfarm Payroll data due later in the day. US employers likely maintained a solid pace of hiring in December while raising wages, putting the economy on a path to stronger growth and further interest rate increases from the Federal Reserve this year, reported Reuters.