Indian shares surrendered the morning's gains at close on Wednesday, dragged by IT stocks after global major Cognizant reaffirmed weakness in client spending in its quarterly earnings results.
The NSE Nifty 50 index settled 0.01% higher at 21,930.50, while the S&P BSE Sensex dropped 0.05% to 72,152.
The Nifty-50 and Sensex rose about 0.5% each earlier in the session.
The Nifty volatility index continued to remain elevated, hovering near a 10-month high of 16.58, hit ahead of the budget on January 30.
"Volatility will remain high, even if the overall sentiment is positive, as investors would be tempted to take some profit every now and then, due to stretched valuations," said Neeraj Dewan, director at Quantum Securities.
India's IT sub-index, the index with the second-highest weightage, dropped 1.25% after U.S.-listed Cognizant Technology Solutions gave a weak revenue forecast for 2024, underscoring weakness in demand.
The index had jumped 2.92% on Tuesday on heightened hopes of a soft landing in the U.S. economy.
"The read-through (from Cognizant's results) for (Indian) IT services companies is negative and highlights caution in discretionary spending by clients," said analysts at Kotak Institutional Equities in a note.
Ten of the 13 major sectors logged gains.
The broader and more domestically-focussed small- and mid-caps rose about 0.75% each, outperforming the benchmarks.
The rise in these segments was supported by a post-results rally in key constituents like JB Chemicals and Pharma, while Max Financial Services climbed on a regulatory nod for capital infusion.
Intellect Design jumped on a deal with Turkey's Vakifbank, while Angel One surged on a strong monthly business update.
Investors now await the Reserve Bank of India's policy decision, due on Thursday. While the central bank is expected to maintain rates, policymakers' commentary on the economy and inflation will be crucial in ascertaining the interest rate trajectory.