The markets are weak in early trade despite an overnight rally on Wall Street after a drastic interest rate cut by the Federal Reserve to near zero.
After opening in the green above 10K levels, the Sensex is down 0.8 per cent to 9897 levels. The Nifty has also shed 0.7 per cent.
“The markets have gained 15-17 per cent in the last 8-9 trading sessions. The rate cut by Fed is a good signal though markets may see bouts of profit booking at higher levels,” said Alok Agarwal, Head of Research, K R Choksey Securities.
The Fed reduced the target for the federal funds rate, the interest that banks charge each other, to a range of zero to 0.25 percent. That is down from the 1 percent in effect since the last meeting in October.
On Wall Street, the Dow Jones industrial average spiked 359.61 points, or 4.20 percent, to close at 8,924.14. It had been up about 100 in subdued trading ahead of the Fed's announcement.
The Standard & Poor's 500 index advanced 44.61, or 5.14 percent, to 913.18, and the Nasdaq composite index rose 81.55, or 5.41 percent, to 1,589.89.
In the Indian markets, buying is seen in consumer durables, banking and capital goods stocks while selling pressure is seen in technology counters.
Among the Sensex stocks, ICICI Bank leads gainers. It has jumped more than 2.5 per cent.
Satyam Computers is down 23 per cent after the company called off its proposed $1.6-billion acquisition of Maytas Properties and Maytas Infrastructure.
“Though the deal has been called off, Satyam shares are likely to remain under pressure in short term and institutional investors may also exit the counter,” said Apurva Shah, Head of Research, Prabhudas Lilladher.
Most Asian markets are trading higher after the U.S. Federal Reserve slashed its key interest rate to historic lows in an effort to pull the world's largest economy out of recession.
Hong Kong's Hang Seng Index is up 0.9 percent while benchmarks in mainland China, Singapore, Thailand and Indonesia added about 1 percent or more.
In Japan, the Nikkei 225 stock average is down 0.6 percent and South Korea's Kospi has shed 0.4 percent.
(With AP inputs)