* NSE index down 0.3 pct, BSE index dip 0.4 pct
* BSE index hits record high in early trade
* Nifty mid cap index down 1.4 pct
By Krishna V Kurup
July 18 (Reuters) - Indian shares erased early gains on Wednesday, with the benchmark BSE index falling from a record high, as the opposition parties tabled a no-confidence motion against Prime Minister Narendra Modi’s government.
Modi’s government has a clear majority in the 545-member lower house of the parliament, but the opposition is hoping to make political gains by highlighting slow job growth and deteriorating law and order.
The broader NSE index fell 0.3 percent to 10,974.95 as of 0710 GMT while the benchmark BSE index dropped 0.41 percent to 36,369.75. The BSE index touched its record high of 36,747.87 in early trade.
Index heavyweight Reliance Industries Ltd, down 1 percent, was the biggest drag on the indexes. Metal stocks and consumer stocks also took a hit with Tata Steel Ltd plunging 4.4 percent and Hindustan Unilever Ltd falling 2.1 percent.
Meanwhile, private sector financial companies such as Housing Development Finance Corp and HDFC Bank gained 1 percent each and Indiabulls Housing Finance Ltd surged 4.1 percent.
“Investors are pulling out money from mid-cap stocks as they are worried about the earnings potential. So, they are putting money in good (large-cap) companies even if the valuations are expensive,” said Sumit Pokharna, vice president, Kotak Securities.
“Uncertainty is killing the market right now,” he added.
Nifty Mid cap 50 Index dropped 1.4 percent.
Punjab National Bank (PNB), Indian Overseas Bank and Corporation Bank Ltd rose in early trading on reports that the government will infuse 113.36 billion rupees ($1.66 billion) in five state-run banks.
However, the stocks shed gains later on concerns that the infusion may not result in earnings growth. “The current infusion plan will not be sufficient to feed the growth of these banks as the infusion will only be helpful to meet the Basel norms, but will not aid earnings growth,” Pokharna said.
Shares of Indian Overseas Bank surged as much as 13.8 percent while Corporation Bank, up as much as 10.1 percent, hit a 4-week high. PNB shares declined 4.4 percent after rising as much as 4.1 percent earlier in the session.
Among gainers, shares of state-owned Oil and Natural Gas Corp Ltd rose 4.3 percent on reports that ONGC has authorised government to sell its 49 percent stake in helicopter service provider Pawan Hans. (Reporting by Krishna V Kurup in Bengaluru; Editing by Vyas Mohan)