MUMBAI (Reuters) - India's stock markets edged lower on Monday, retreating from over two-month highs hit in the previous session as investors booked profits even as Asian equities gained after China cut interest rates for a sixth time in less than a year.
Disappointment over earnings also hit some shares such as Asian Paints Ltd and Bharti Airtel Ltd .
China's monetary policy easing took place on Friday after the close of markets in India. Regional shares rose on hopes the action would help jump start growth in the world's second-largest economy.
But traders saw Indian markets as overbought after indexes have gained for four consecutive weeks, hitting their highest intraday levels since Aug. 20 on Friday.
Markets were also briefly jolted after NSE index futures jumped as much as 5.1 percent to 8,723.85 points in what traders speculated may have been an errant trade, before trading back down at around 8,290 points.
"Nothing has changed as far as the market outlook is concerned. It is slightly overbought, so obviously some corrections have happened," Deven Choksey, managing director at KR Choksey Securities said.
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The 30-share BSE Sensex was trading 0.07 percent lower after rising as much as 0.54 percent earlier in the session.
The Nifty was down 0.17 percent after gaining as much as 0.49 percent earlier.
Asian Paints fell 5 percent, becoming the biggest drag on the index, after the company reported quarterly results on Friday that missed analysts' estimates.
Bharti Airtel also slipped 2 percent even as its second-quarter profit beat analysts' estimates. Traders said results were in line with forecasts after adjusting for exceptional items.
But Housing Development Finance Corp was up 0.44 percent ahead of reporting quarterly earnings later in the day.
(Reporting by Karen Rebelo in Mumbai; Editing by Anand Basu)