State Bank of India dropped 1% after Standard & Poor's lowered the stand-alone credit profile of the government-owned lender citing concerns over the asset quality and high credit cost.

Union Bank of India too dropped by 1.45% following a similar downgrade by S&P. Shares of IRB Infrastructure dropped despite the company announcing that it has completed the process of acquiring 74% holding of MVR Infrastructure & Tollways Pvt Ltd and thereby MVR has now become a subsidiary of IRB from October 2012.

Tata Steel gained on reports that the company was planning a large investment in its facilities in the Netherlands.

Among the early gainers from the Nifty were Asian Paints, Grasim, Tata Motors and Cairn India. Shares of software companies found buyers at lower levels with TCS and Wipro both gaining in early trades.

PSU banks which have been rallying over the last few trading sessions saw selling pressure with Canara Bank, Oriental Bank, Indian Overseas Bank and Bank of Baroda seeing large scale selling pressure.

Markets are expected to remain choppy ahead of the earnings season, which will kick-off with results of Infosys and HDFC on Friday.

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