Indian shares eased after hitting record highs on Monday as a drop in information technology stocks due to U.S. rate cut concerns capped gains, a day after Prime Minister Narendra Modi was sworn in for a rare third term.

The NSE Nifty 50 index was down 0.2% at 23,337.55, while the S&P BSE Sensex was up 0.09% to 76,760.48, as of 10:43 a.m. IST.

Both the benchmarks rose about 0.5% each during the session and hit record high levels before surrendering gains.

The Nifty added 3.4% last week after Modi's alliance won the general elections by a surprisingly slim majority.

Indian markets could take a breather for a few sessions after a sharp rally last week, according to analysts at Equinomics Research and Geojit Financial Services.

"After the jump last week, domestic equities might see some significant volatility with some corrections as valuation concerns persist," said G Chokkalingam, founder and head of research at Equinomics Research.

Coalition governments in the past have always been associated with high volatility in equity markets, he added.

The IT index fell 2% and was the top sectoral loser. Tech Mahindra, LTIMindtree, Infosys , HCLTech and Wipro shed 2%-3% to become the top five Nifty 50 losers.

The drop in the shares of IT companies, which earn a significant share of their revenue from the U.S., follows stronger-than-expected U.S. monthly jobs data, dampening expectations of early Federal Reserve rate cuts.

Metals fell 0.5%, hurt by a stronger U.S. dollar following the jobs data and mixed trade readings from top consumer China.

A strong U.S. dollar makes metals more expensive for buyers using other currencies.

In contrast, state-owned lenders gained 1.5% and the index was the top percentage sectoral gainer.

Meanwhile, Nomura said it remained overweight on financials, infrastructure, and oil and gas stocks, among others, on hopes of policy continuity after Modi took oath as prime minister over the weekend.

 

 

 

 

(Reporting by Kashish Tandon and Bharath Rajeswaran in Bengaluru; Editing by Nivedita Bhattcharjee and Sonia Cheema)