Sensex off day's low as banking stocks recover

The BSE Sensex traded around 100 points off the day's low of 19,963 after banking stocks bounced back in the green. Still, the Nifty traded below its 200 day moving averages for the first time since October 9, 2013.

As of 11.10 a.m., the Sensex traded down 0.81 per cent or 163 points at 20,045, while the Nifty traded lower at 5,956, down 45 points. The rupee also traded off the day's low at 62.64 after earlier falling to 62.83 per dollar.

Banking stocks, which had fallen as much as 1.5 per cent in opening trade, bounced back in the green. On the Nifty, state-run Bank of Baroda was the top gainer, up 1.5 per cent, followed by State Bank of India, which rose 1.4 per cent.

However, IT stocks extended losses and the BSE's IT benchmark traded 2.1 per cent lower. HCL Tech was the top Nifty loser, down 3.64 per cent, while Wipro traded 2.8 per cent lower.

What's causing the selloff in markets?

Foreign institutional investors, which pumped in $20 billion in India last year, have turned net sellers over the last few days. FIIs have sold equities worth around Rs 4,000 crore in the cash market over the last six sessions as part of a slump in emerging markets.

Although India is seen in a better position than other countries such as Turkey due to its improved current account deficit and foreign exchange reserves, the country is being hit nonetheless. Indian markets will thus continue to be beholden to global risk factors, including concerns about the Federal Reserve's withdrawal in monetary stimulus and an economic slowdown in China.

Weakness in US and Chinese manufacturing sent Asian stock markets sharply lower Tuesday. The slide in Asian markets followed losses Monday in Europe and on Wall Street after sentiment was hurt by the weak data from the world's two biggest economies.

(With inputs from agencies)