The benchmark BSE Sensex retreated from record highs, dropping by 69.74 points in late morning trade on bouts of profit-booking in recent gainers led by consumer durables, banks, capital goods, financials and auto shares.
Caution crept in ahead of quarterly results by index heavyweights. Tata Consultancy Services will announce its Q3 results tomorrow, while Infosys will declare results on Friday.
The 30-share Sensex was trading lower by 69 points or 0.20 per cent at 34,373.45 1230 hrs.
Realty, telecom and energy segments saw buying interest.
Foreign portfolio investors (FPIs) net sold shares worth Rs 303.94 crore while, domestic institutional investors (DIIs) bought equities to the tune of Rs 522.90 crore, provisional data showed.
Asian markets were mixed, US equities rose to record highs yesterday as investors remained optimistic about the market heading into the corporate earnings season.
-- Rupee drops 6 paise against US dollar --
The rupee pared its early gains to trade down by 6 paise at 63.77 against the greenback in afternoon deals on sustained bouts of dollar buying by banks.
The rupee opened higher at 63.58 per dollar from yesterday's closing level of 63.71 at the inter-bank foreign exchange market today.
The Indian unit fluctuated between a high of 63.53 on and low of 63.85 during morning trade.
It was quoting 63.77 per dollar at 1230 hrs.
The US dollar
was up against a basket of currencies, bolstered by higher US Treasury yields but still constrained against the yen after the Bank of Japans move to trim its purchases of Japanese government bonds triggered tapering fears.