Erasing early gains, Sensex closes 45 pts down

The Sensex, which had climbed to 20,190.13 at the outset, fell back to close with a loss of 44.73 points at 20,028.93 with stocks of metal, realty and power sectors suffering fresh losses.

However, the downtrend was capped following a rise in shares of healthcare, IT and consumer durables as investors shifted to fundamentally stronger sectors ahead of restricted participation by foreign funds due to year-end holidays.

The broad-based National Stock Exchange index Nifty fell by 13.50 points to 5,998.10, after touching the day's high of 6,045.75.

Besides profit selling, a weak opening in European markets this afternoon further influenced the softening trend. European stocks fell, trimming the longest stretch of weekly gains since April, and US index futures dropped as well.

Thin presence of major global market players due to the year-end holidays mainly affected the trading sentiment and reduced business volumes.

The metal sector index suffered the most by losing 1.24 per cent to 17,059.88 on reduced offtake as investors were of the view that China will tighten monetary policy in 2011 to tackle inflation, reducing demand for commodities.

The Realty sector index lost 0.82 per cent to 2,742.16 followed by Power index by 0.35 per cent to 2,922.97. The FMCG index lost 0.30 per cent to 3,574.42.

The downtrend was cushioned as IT sector rose on hopes that tech demand will increase as the US economic recovery gathers pace. The IT index rose by 0.25 per cent to 6,711.10 as Infosys Technologies gained for the fourth straight session by adding Rs 10.25 to Rs 3,378.75.

Investors are looking for low valuation stocks till the market takes a new direction on allocation of funds by foreign investors. The smallcap sector index gained 0.21 per cent to 9,374.21, while midcap index ended moderately lower by 0.17 per cent to 7,614.03.