BENGALURU, Dec 21 (Reuters) -

India's stock benchmarks extended a decline from the previous session on Thursday, led by high-weightage financials, as investors booked profits after a recent rally, while a global market rally also stalled.

The blue-chip NSE Nifty fell 0.13% to 21,121.55 points, while the S&P BSE Sensex shed 0.15% to 70,400.47, as of 10:20 a.m. IST.

"After the recent sharp rally, market corrections are a natural response to recalibrate valuations," said Rahul Sharma, managing partner of Equity 99.

The Nifty 50 is up 4.7% so far in December, on course to log the second-best monthly performance in 2023.

Financials lost about 0.4%. Realty and pharma also dropped about 0.4% and 6%, respectively.

The small- and mid-caps gained 1% and 0.7%, after a sharp slide in the previous session.

"The prevailing expensive valuations in the small and mid-cap segments of the market can make these stocks particularly sensitive to changes in market trajectory, sentiment and external factors," Sharma added.

The small- and mid-caps have gained 48% and 40% in 2023 so far, compared to a 16.4% rise in the Nifty 50.

Media index surged 2.5%, powered by a 4.5% rise in top constituent Zee Entertainment Enterprises after the company

said

it is in talks with Sony Group's India unit on extending a merger deadline.

Cochin Shipyard

and

Mazagon Dock Shipbuilders

gained about 3.5% each, after signing contracts with India's Ministry of Defence.

Non-bank finance companies Piramal Enterprises and IIFL Finance lost 2% and 4.5%, respectively, extending their decline after the Reserve Bank of India tightened norms for investments in Alternative Investment Funds (AIFs).

Piramal Enterprises

said

it has made investments worth 38.17 billion rupees in AIFs, as of Nov. 30.

Asian shares fell after a drop in Wall Street equities overnight ahead of U.S. third-quarter growth data on Thursday and a key inflation reading on Friday.

(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Varun H K)