Feb 16 (Reuters) - India's equity benchmarks traded mostly flat on Monday, as sentiment stayed weak after last week's sell-off in IT stocks, while brokerages and the stock exchange BSE fell after the central bank moved to tighten banks' capital market exposures.
The Nifty 50 rose 0.08% to 25,493.3, while the BSE Sensex added 0.07% to 82,685.68, as of 10:00 a.m. IST.
Eight of the 16 major sectors logged losses. The broader small-caps and mid-caps fell 0.2% each.
The Nifty and Sensex fell about 1% each last week, dragged by IT stocks on anxiety around AI automation tools and their impact on traditional software businesses.
The IT index fell 0.5%, extending losses. It fell 8.2% last week, its worst showing in 10 months.
"The IT sell-off will continue to weigh on markets in the near term," said VK Vijayakumar, chief investment strategist at Geojit Investments.
"Institutionals are likely to continue selling IT stocks and switch to sectors with good earnings growth visibility."
Among individual stocks, Fractal Analytics, the country's first pure-play AI firm, fell 2.7% over its issue price of 900 rupees in its debut trading session.
Stock exchange operator BSE tumbled 9%, while brokers such as Groww, Motilal Oswal, Angel One lost between 1% and 7%.
The Reserve Bank of India's "new circular tightens banks' capital market exposures, and will raise costs for brokers and proprietary desks, curbing leverage and liquidity in derivatives, where proprietary trading drives 40% of futures and options turnover," said Devarsh Vakil, head of prime research at HDFC Securities.
Pharma index rose 0.9%, led by Torrent Pharma which gained 5.6% after posting an uptick in December-quarter profit.
Natco Pharma climbed 9.5% after receiving approval to launch Semaglutide in India. Semaglutide is used to manage chronic weight and treat type-2 diabetes.
(Reporting by Vivek Kumar M and Bharath Rajeswaran in Bangalore; Editing by Sumana Nandy and Janane Venkatraman)
By Bharath Rajeswaran and Vivek Kumar M
