Sensex and Nifty recovered from their day's lows and turned flat around noon on December 9, with the smallcap and midcap indices gaining momentum from their flattish levels. While financial services remained in the green, consumer stocks continued to drag on the Nifty 50, falling over 2 percent.

At 11:50 AM, the Sensex was up 24 points or 0.03 percent at 81,733, and the Nifty was down 1.2 points at 24,676. About 2,241 shares advanced, 1,253 shares declined, and 108 shares remained unchanged.

The near-term trend of the benchmarks appears uncertain, with investors awaiting the US consumer price inflation (CPI) data due on December 11 and India's CPI data on December 12.

Foreign institutional investors (FIIs) have been net buyers in December so far, purchasing nearly Rs 12,000 crore worth of Indian equities, which has provided a boost to market sentiment.

"The sustainability of the (market) rally is doubtful since the slowing Indian economy will constrain the bulls, and the FIIs may again turn sellers as there is no valuation comfort in the market," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. He added that while momentum in the US market is robust, bulls in India cannot be overly optimistic.

In the domestic market, the Nifty FMCG index fell over 2 percent, dragged down by Godrej Consumer Products, whose shares plunged over 9 percent following the company's weak growth outlook for the October-December quarter. The company anticipates mid-single-digit sales growth for Q3, citing "subdued" demand conditions in the economy over the past few months.

The Nifty Pharma and Nifty Healthcare indices declined 0.7 percent after the US Biosecure Act was excluded from a key defense bill, marking a win for Chinese biotech firms. This setback could negatively impact Indian Contract Development and Manufacturing Organisation (CDMO) and Contract Research Organisation (CRO) companies.

Shares of Neuland Laboratories fell over 5 percent. Other pharmaceutical companies, including Divi's Laboratories, Piramal Pharma, Syngene, and Laurus Labs, also posted losses of 2-5 percent.

The Nifty Auto index slipped 0.3 percent following the latest retail figures for November, which showed a year-on-year decline in passenger and commercial vehicle sales. Hyundai Motor shares dropped over 1 percent, Tata Motors declined by nearly a percent, and Maruti Suzuki and Mahindra & Mahindra were down 0.1 percent and 0.3 percent, respectively.

Defying the broader trend, tire maker Ceat saw its shares surge over 10 percent after announcing plans to acquire French company Michelin's Camso brand for $225 million.

On the Nifty 50 index, HUL, Tata Consumer, Hindalco, Nestle, and Britannia were the top gainers, rising 2-4 percent. Meanwhile, Larsen & Toubro, SBI Life, Kotak Mahindra, HDFC Bank, and HDFC Life gained 1-2 percent each.

In the broader market, the BSE Midcap index advanced 0.4 percent, while the BSE Smallcap index gained 0.6 percent. Both indices have shown significant upward momentum, with the BSE Midcap index recording gains in 10 out of the last 11 sessions and the BSE Smallcap index rallying for 11 consecutive sessions.

Axis Securities said in a note that 24,683 was the trend-deciding level for Nifty 50 for the day. "If Nifty trades above this level, we may witness a further rally up to 24,746-24,814-24,876 levels. However, if it trades below 24,683, some profit booking may occur, with potential corrections to 24,615-24,553-24,485 levels," the brokerage said.