The Sensex was trading 53 points lower, while the Nifty opened lower by 21 points at 7520 points. Among the early losers in trade once again were the oil marketing company stocks following escalations in tensions in Iraq. BPCL, HPCL and Indian Oil were all down in trade.
Other Nifty stocks that declined in trade were Tata Motors, ACC and Ambuja Cements.
The Banking Nifty saw clear selling pressure with PSU banking stocks amongst the biggest losers. Punjab National Bank, Bank of India and Canara Bank were amongst the biggest losers in trade. Software stocks were the clear winners as the rupee depreciated against the dollar. Infosys, TCS and Wipro rallied in early trade.
Bharti Infratel lost ground despite reports that the company was looking to buy its parent Bharti Airtel's telecom towers in Sri Lanka and Bangladesh.
Tata Motors was trading lower after reports that the company has shut its plant in Gujarat, where the Nano is manufactured, for between 35 to 40 days on account of low demand.
Mid cap stocks saw some heavy selling pressure with notable losers from the space being Unitech, Oriental Bank, Union Bank and Syndicate Bank.
Meanwhile, Asian markets were trading lower led by declines in the Hong Kong's Hang Sang and the Chinese Shanghai Composite on worries over the escalation in tensions in Iraq.