Nifty, Sensex Give Up Record Highs As HUL, Bajaj Finance Weigh: Midday Market Update

India's benchmark indices pared gains on Monday after opening at record highs in the session to trade flat at midday, as shares of Hindustan Unilever Ltd., Bajaj Finance Ltd., and Reliance Industries Ltd. dragged the Nifty and Sensex lower.

At 12:23 p.m., the NSE Nifty 50 was trading 18.35 points, or 0.07% lower at 25,338.15, and the S&P BSE Sensex was down 47.44 points, or 0.06% at 82,843.50. Nifty and Sensex rose as much as 0.35% during early trade on Monday.

Nifty, which has rallied 16.7% year-to-date, is one of the best performing stock indices in the world. Even though India’s economic fundamentals and corporate earnings are strong, the single most important factor driving the Indian market now is the sustained domestic liquidity flows into the market, according to VK Vijayakumar, chief investment strategist, Geojit Financial Services Ltd. "Since the undertone of the market continues to be bullish, it makes sense to remain invested. Among sectors, IT and pharma are showing strength."

Globally, equity markets will be focused on the Fed rate action on Wednesday, which is likely to influence the stock market trend in the near-term, Vijayakumar said.

"The first rate cut by the Fed in four years is a foregone conclusion, the only uncertainty is about the extent of the rate cut, that is, whether the cut will be 25 basis points or 50 basis points. The market will also be keenly watching the Fed commentary on the evolving economic outlook."

Shares of Bharti Airtel Ltd., Axis Bank Ltd., Mahindra & Mahindra Ltd., and HDFC Bank Ltd. were positively contributing to gains in the Nifty 50.

While those of Hindustan Unilever Ltd., Bajaj Finance Ltd., Reliance Industries Ltd., and Infosys Ltd. were weighing the index.

On NSE, eight of the 12 sectors advanced, with Nifty Media and Metal advancing the most during the session. The Nifty FMCG slipped the most on Monday.

Broader markets underperformed the benchmark indices, with the Midcap and Smallcap trading flat through midday on Friday.

On BSE, 12 of the 20 sectors advanced, with BSE Power and Utilities leading gains.

Market breadth was skewed in the favour of buyers. Around 2,041 stocks rose, 1,892 stocks declined, and 131 remained unchanged on the BSE.