Markets traded with a negative bias Wednesday, a day after the benchmark indices posted 2% gains. The Sensex traded nearly 50 points or 0.3% lower at 17,145 while the broader Nifty index declined nearly 20 points to 5,180 at 0925 hours.

Indian markets saw the best January in many years and some consolidation is likely to happen going forward. However, analysts remained optimistic in their outlook.

"In the short term, the market looks over bought and corrections till 5,000-5,050 cannot be ruled out. However, a break past 5,300 would mean that markets are headed for extensions and targets in the region of 5,900-6,000 are possible," Independent analyst Sarvendra Srivastava told NDTV Profit.

Auto stocks like Hero MotoCorp (1.4%), Bajaj Auto (1.3%) and Maruti (1.1%) led the gains ahead of reporting monthly sales number today. The Bombay Stock Exchange auto index traded with 1% gains. Metal and energy stocks also traded higher. On the negative side, banking, realty, capital goods and consumer durables saw profit booking.

State run steel major SAIL (2%) was the biggest gainer on the Nifty index. JSPL (1.8%) and Tata Power (1.5%) also traded higher.

Sesa Goa (down 3%) saw profit booking after sharp gains yesterday. HDFC (down 2%) fell on a block deal. Siemens (down 2%) declined as Q3 margins disappointed. Coal India (down 1.3%) remained under selling pressure after a downward revision of coal prices.

The market breadth was even with nearly 52% stocks rising on the broader BSE 500 index.