Bengaluru-Indian shares hit record highs at the open on Tuesday before surrendering those gains due to a drop in auto and financial stocks.
The NSE Nifty 50 was down 0.01% at 24,133 points as of 10:06 a.m. IST, while the S&P BSE Sensex was flat at 79,384 points.
IT stocks rose 1%, adding to their 2% jump on Monday after slightly cooler U.S. inflation data boosted expectations of a Federal Reserve rate cut in September.
IT companies earn a significant share of their revenue from the U.S.
The odds of a U.S. rate cut in September remains high and as the probability increases, it will spur the re-entry of foreign money into India, said Sreeram Ramdas, vice president at Green Portfolio.
While the outlook remains positive, markets could be range-bound in the short term, while awaiting union budget announcements later in the month, Ramdas added.
Auto stocks lost 0.5%. Tata Motors and Ashok Leyland shed 1.%, while Bajaj Auto dropped 1%.
Signs of weakness in passenger vehicles sales were visible from June auto sales data, said Nomura analysts Kapil Singh and Siddhartha Bera.
Ashok Leyland and TVS Motor and Tata Motors missed estimates, they added.
The month-long rally in banks, financials and private banks stalled, with the sectors losing about 0.7% each. They surged 7%-8% in June.
Trading platforms declined after the market regulator asked market institutions like exchanges to levy uniform charges on brokers and not on volumes.
Angel One, 5Paisa Capital, SMC Global Securities and Motilal Oswal Financial lost between 2%-6%.
Shares of Allied Blenders and Distillers rose 10% in their trading debut.
(Reporting by Hritam Mukherjee and Bharath Rajeswaran in Bengaluru; Editing by Savio D’Souza)
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