INDIA STOCKS-India stock benchmarks trade flat ahead of Fed decision

By Bharath Rajeswaran and Vivek Kumar M

Sept 15 (Reuters) - India's equity benchmarks were largely flat on Monday, in line with Asian peers, ahead of the Federal Reserve's policy decision later this week, where investors expect the central bank to resume its easing cycle.

The Nifty 50 .NSEI was down 0.11% at 25,085.45, while the BSE Sensex .BSESN fell 0.04% to 81,865 as of 10:18 a.m. IST.

The Nifty had risen 1.5% last week, marking an eight-session winning streak on Friday, its longest in a year, buoyed by optimism around U.S.-India trade negotiations and the government tax cuts to spur consumption.

On Monday, nine of the 16 major sectors advanced, providing modest support to the benchmarks but IT stocks .NIFTYIT, which had rallied 4.3% last week, pulled back 1% and were the biggest drags.

Small-cap .NIFSMCP100 and mid-cap .NIFMDCP100 indexes added 0.5% and 0.1%, respectively.

Asian stocks traded flat ahead of an action-packed week that is seemingly certain to see the Fed cut interest rates on Wednesday, and perhaps leave the door wide open to a series of reductions. MKTS/GLOB

Lower U.S. rates drag down Treasury yields and the dollar, pushing flows towards emerging markets such as India.

"There's a sense of caution (in Indian equities) after the sharp run-up last week," said G. Chokkalingam, founder and head of research at Equinomics Research.

"Liquidity is tightening due to persistent foreign outflows, promoter selling, and a shift of funds to robust IPOs. Still, meaningful progress in U.S.-India trade talks could quickly spark a sharp recovery."

Among individual stocks, telecom infrastructure firm Railtel Corp RAIT.NS surged 7.6% after winning an order worth 2.1 billion rupees.

Engineering consultant Engineers India ENGI.NS and construction company Ceigall India CEIG.NS gained about 2% each on order wins.

Rice exporter KRBL KRBL.NS tumbled 9% after an independent director resigned, citing corporate governance issues.

Alcobev companies Radico Khaitan RADC.NS and Allied Blenders ALLE.NS rose about 2%, while United Spirits UNSP.NS gained 0.5% after Jefferies initiated coverage with a "buy" recommendation.