The stock markets pared their early gains by midday, settling into lackluster trading. Around midday, the Sensex was up a mere 0.19 per cent at 18,373.14, while the Nifty traded at 5,584.25, up 0.22 per cent.
The markets opened on a high note today buoyed by the positive sentiment in the Asian and world markets on hopes of a breakthrough in the US tax talks as well as encouraging US housing data.
However, the political uncertainty back home took a toll on market sentiment as buying interest tapered off ahead of the crucial Winter Session of Parliament which kicks off on 22 November.
G. Chokkalingam, executive director and chief investment officer at Centrum Wealth, told NDTV that the next two weeks may be challenging for the markets although midcaps will continue to do well. A correction in the markets will present an opportunity to buy.
The top Sensex gainers were HDFC (2.08 per cent), Mahindra & Mahindra (1.46 per cent), GAIL India (1.07 per cent), Tata Power (1.03 per cent) and Wipro (0.94 per cent).
United Spirits shares rose 1.7 per cent to Rs 1,782.55 even as Diageo announced an open offer to acquire a 26 per cent stake in the Indian spirits maker. (Read More)
Bharti Airtel,which has gained in five consecutive sessions, traded at Rs 310.80, a muted gain of 0.32 per cent.
The top losers included Infosys (1.69 per cent), Sun Pharma (1.17 per cent), Hero MotoCorp (0.86 per cent), Bajaj Auto (0.76 per cent) and SBI (0.46 per cent).
Bharat Iyer of JPMorgan said:"We remain constructive on Indian equities as we go into 2013.The policy environment is improving, as evidenced in a series of announcements from the Government over the last two months."
Asian shares rose today on hopes of a compromise in the US fiscal crisis, while the euro fell after Moody's Investors Service scrapped France's top-notch credit rating, reiterating the protracted debt crisis in the 17-nation euro zone. MSCI's broadest index of Asia-Pacific shares outside Japan inched up 0.3 per cent. Australian shares were up 0.2 per cent and South Korean shares opened 1 per cent higher.
Overnight, global stocks and commodities surged to recover some of last week's sharp losses on hopes US lawmakers will reach a deal to avert $600 billion in tax increases and spending cuts due to start in January - the ‘fiscal cliff’ that threatens to send the U.S. economy back into recession.
Wall Street climbed almost 2 per cent, extending its Friday rally, with the Standard & Poor's 500 Index closing above its 200-day moving average for the first time in eight sessions.
With inputs from Thomson Reuters