Markets pare morning gains

Markets surged to three-week highs, tracking Asian bourses. The Sensex opened at 18,564 and surged to a high of 18,591. The index started dropping thereafter and was up 57 points at 18,564.

Nifty was up 20 points at 5,566.

"The markets have corrected as near-term news flow has remained negative with macro head wings like inflation, tight liquidity and political concerns (on back of corruption and scam issues) contributing to downfall," said Jigar Lodaya, AVP (Advisory Equity), Sharekhan.

Investors are looking for the next big trigger, which would come as the Finance Minister presents the Budget on February 28, 2011.

BSE sectoral indices were in green, led by bankex and FMCG stocks.

BSE bankex jumped 1% to 12,786. Indusind Bank jumped 2.5% to Rs 235. HDFC Bank, Punjab National Bank, KOtak Mahindra Bank and Axis Bank were up 1-2% each.

Among other gainers, Bank of India, ICICI Bank, SBI, Bank of Baroda were up.

Infosys also contributed to the market's rally. The stock was up 1% at Rs 3,139. Other IT stocks - Wipro jumped 2% to Rs 440. TCS was up 1.5% at Rs 1,126.

Hindustan Unilever gained 2.5% at Rs 281. ITC was flat at Rs 159.

BHEL, Maruti Suzuki, Hindalco, Hero Honda and DLF were up 1-2% each.

On the losing side, Reliance Communications dropped 2% to Rs 98. Realty stocks - Reliance Infra, Jaiprakash Associates and auto stocks - Mahindra & Mahindra, Tata Motors slipped around 1% each.

BSE market breadth was positive. Out of 2,408 stocks traded, 1454 advanced while 873 declined.