The Sensex and Nifty pulled back from a near two-month high on Friday, as a slump in IT shares on worries over H-1B visas outweighed positive sentiment from continued gains in Asian stocks.
However, overall sentiment remained upbeat with the broader Nifty heading for a weekly gain of 1 percent in what could be its second such rise. The index also crossed above its 200-day exponential moving average on Thursday, an indicator of a further upside.
Gains in Asian shares, with MSCI's ex-Japan Asia-Pacific shares index at four-week highs, have come as investors are increasingly hopeful about quarterly earnings and that the government will deliver a fiscally responsible budget on Feb. 1.
"A pre-budget rally in the month of January is anticipated and soon we will see corporate earnings unfold where markets will get a direction from," said Gaurang Shah, vice president, Geojit BNP Paribas.
The Nifty was down 0.03 percent at 8,271 as of 12:50 p.m. after gaining as much as 0.4 percent to its highest since November 11 earlier in the session.
The Sensex was 0.02 percent lower at 26,873.93 after touching a near two-month high. It has gained 0.9 percent so far this week.
IT stocks were among the biggest losers as two U.S. lawmakers reintroduced a bill to curb the use of H-1B visas, including requiring employers to pay more for workers under the system.
The Nifty IT index fell as much as 3.2 percent in its biggest percent loss since Nov. 9. HCL Technologies and Tech Mahindra declined up to 4.5 percent each.
But financials supported the index most with the NSE Bank index gaining as much as 1.16 percent. ICICI Bank and State Bank of India rose 1.5 percent each.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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