BENGALURU, March 20 (Reuters) - Indian shares reversed early gains ahead of the U.S. Federal Reserve's interest rate decision, while Eicher Motors jumped after UBS upgraded the stock.
The blue-chip NSE Nifty 50 index shed 0.45% to 21,718, while the BSE Sensex fell 0.44% to 71,699.09, as of 10:51 a.m. IST.
They had risen about 0.3% each at the open, after sliding to a five-week low in the previous session.
Markets have resumed a corrective tone with the benchmark Nifty slipping below a crucial support zone of 21,850 levels, said Ajit Mishra, senior vice president of research at Religare Broking.
Twelve of the 13 major sectoral indexes declined. Financial stocks, the highest-weighted sector, fell 1%.
The broader, more domestically focussed small-caps and mid-caps dropped 1.1% each.
So far in March, they are down about 10% and 6%, respectively, compared to a 1.2% drop in the Nifty 50.
"Small-, mid-caps could see further pressure due to earnings headwinds amid concerns of elevated valuations," said Prateek Parekh and Priyank Shah, analysts at Nuvama Institutional Equities.
Eicher Motors gained 4.3% after UBS upgraded the motorcycle maker's shares to "buy" from "neutral", and raised its price target citing likely gains from new Royal Enfield models and attractive valuations.
Tata Steel and Hindalco Industries fell 3% each, following a drop in global metal prices and a rise in the U.S. dollar. The Nifty metal index fell 1.7%.
Asian shares were hesitant on concerns the Fed could signal a slower path of interest rate cuts this year, while the yen plumbed a fresh four-month low on expectations that policy in Japan will remain accommodative for a while longer.
Commentary from the U.S. central bank will be crucial to assess the timing of the Fed rate cut after recent inflation data sparked worries of a delay. Markets expect a Fed rate cut in June. (Reporting by Bharath Rajeswaran in Bengaluru; Editing by Sohini Goswami, Janane Venkatraman and Shounak Dasgupta)
