BENGALURU, Feb 26 Reuters Indian shares were subdued on Monday, weighed by IT stocks and a drop in Asian Paints on concerns over increasing competition and as investors likely booked profits after a recordbreaking run last week.

As of 1019 a.m. IST, the bluechip index NSE Nifty 50 was down 0.36 to 22,133.20, after hitting record highs in each of the five sessions last week.

The BSE Sensex shed 0.40 to 72,852.46.

The broader, more domesticallyfocussed smallcaps were flat, while midcaps shed 0.5.

Markets are worried about valuations, which is leading to occasional profit booking, said Avinnash Gorakshakar, head of research at Profitmart Securities.

Otherwise, the construct remains positive for domestic equities, with steady retail inflow and corporate growth visibility as seen from the December quarter results.

Gorakshakar expects the Nifty and Sensex to continue to scale new highs between now and national election results in May 2024, with expectations of policy continuity aiding sentiment.

IT stocks dropped 1.25, ahead of a key U.S. inflation reading later in the week, which could influence the Federal Reserve39;s future rate trajectory. IT companies earn a significant share of their revenue from the U.S.

If U.S. inflation remains elevated, it will force the Fed to switch back to a more hawkish policy stance, which will weigh on IT stocks, said analysts at Systematix Institutional Equities.

Asian markets were subdued, ahead of key inflation readings, including…