The Sensex and Nifty were trading flat as investors booked profits in lenders amid caution ahead of a widely-anticipated interest rate cut at the central bank's policy meet on Wednesday.

However, both indexes fell briefly after data showed that manufacturing PMI plunged in July to its lowest since February 2009, after Prime Minister Narendra Modi's new tax policy severely hurt output and demand.

At 2.20 p.m., the 30-share BSE index Sensex was up 18.25 points or 0.06 per cent at 32,533.19 and the 50-share NSE index Nifty was up 14.6 point or 0.14 per cent at 10,091.70.

Among BSE sectoral indices, auto index was the star-performer and was up 1.37 per cent, followed by metal 0.78 per cent, healthcare 0.65 per cent and oil & gas 0.57 per cent. On the other hand, consumer durables index fell 0.79 per cent, capital goos 0.54 per cent and power 0.16 per cent.

Top five Sensex gainers were Dr Reddy's (+2.51%), Maruti (+2.1%), M&M (+1.75%), Adani Ports (+1.6%) and Wipro (+1.59%), while the major losers were HDFC (-1.27%), Asian Paints (-1.22%), ONGC (-1.21%), L&T (-1.02%) and State Bank of India (-0.78%).

Profit-booking

Investors booked profits in lenders such as Bank of Baroda Ltd and Canara Bank Ltd which declined 1 per cent each after two straight sessions of gains. State Bank of India fell as much as 1 per cent, pulling back from a rally in the previous session after it cut deposit rates on most savings accounts.

“This (SBI's rate cut move) reinforces our expectations that the RBI might lower the benchmark repo rate by 25 bps,” DBS Group Research said in a note.

The Reserve Bank of India is expected to cut interest rates on Wednesday in response to an inflation rate running well below target, a Reuters poll showed.

Meanwhile, the Nifty auto index rose as much as 1.2 per cent to hit a record high, on expectations of higher sales numbers from Indian automakers in July.

Automakers have increased production to fill up the gap in inventory prior to the launch of the Goods and Services Tax and will therefore ship more vehicles to dealers, said Mahantesh Marilinga, senior research analyst at Finquest Securities.

Maruti Suzuki rose as much as 2.2 per cent to touch an all-time high, after reporting a 21 per cent increase in July sales.

Early trade

The Nifty rallied 23.95 points or 0.23 per cent to a new record high of 10,101.05, knocking off its previous intra-day high of 10,085.90 it touched yesterday fuelled by strong corporate earnings and positive global developments.

The 30-share Sensex too gained 100.51 points or 0.30 per cent to 32,615.45. The gauge had risen 205.06 points in the previous session to close at an all-time high of 32,514.94.

Asian shares

Asian shares ticked up on Tuesday as investors looked to a barrage of economic data around the world to confirm recent signs the global economy is in fine fettle with inflation staying well contained.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.5 per cent, led by gains in financials and energy shares, while Tokyo's Nikkei rose 0.2 per cent.

The Dow Jones Industrial Average hit a record closing high on Monday, helped by Boeing, while selling in Facebook, Alphabet and other technology companies checked the S&P 500 and pulled the Nasdaq lower.

The S&P 500 information technology dipped 0.53 per cent, with Facebook falling 1.86 per cent and Alphabet, Google's parent company, down 1.34 per cent.