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* NSE index up 0.04 pct, BSE index 0.05 pct higher
* Nifty PSU bank index down 1.8 pct
* Investors book profit in recent outperformers
By Samantha Kareen Nair
May 9 (Reuters) - Indian shares were flat on Tuesday as investors booked profits in recent outperformers such as Ambuja Cements Ltd and ACC Ltd while banks erased gains from the previous session's rally.
Caution also prevailed ahead of a late spell of quarterly earnings, with Bharti Airtel slated to announce results later in the day.
Asian shares were also subdued as investors looked for the next catalyst after France's presidential election.
"The recent rally in banks was a bit overdone as there is still not much clarity with regard to how the government's ordinance for tackling bad debt will pan out," said Saurabh Jain, assistant vice-president of research at SMC Global Securities.
"Investors will continue to watch the progress of what's left in the earnings season."
The broader NSE index was up 0.04 percent at 9,318.2 as of 0520 GMT, while the benchmark BSE index was 0.05 percent higher at 29,942.47.
The Nifty PSU bank index fell as much as 1.84 percent after rising as much as 1.59 percent in the previous session. State Bank of India was down 1.4 percent while Bank of India and Bank of Baroda declined more than 2 percent each.
Banks gained on Monday after India tweaked its laws last week to help tackle a record $150 billion in bad loans, a move aimed at pushing reluctant lenders towards writedowns and errant borrowers into insolvency.
Ambuja Cements fell 1.5 percent while ACC was down 0.6 percent. Both stocks had traded in the green in the previous four sessions.
Canara Bank declined as much as 4.4 percent as it posted a lower-than-expected fourth-quarter profit on Monday, while Union Bank of India also fell 3.8 percent after missing estimates on March-quarter profit.
Book publisher S Chand and Company Ltd gained as much as 4.48 percent before paring gains in a tepid market debut. (Reporting by Samantha Kareen Nair in Bengaluru; Editing by Sunil Nair)