INDIA STOCKS-Indian shares dragged lower by Bajaj Finance

(Updates levels, adds analysts' comments)

BENGALURU, Jan 5 (Reuters) - Indian shares gave up their gains to decline on Thursday after Bajaj Finance's disappointing quarterly update weighed on the high-flying financials sector.

The Nifty 50 index was down 0.77% at 17,905.40 as of 1:42 p.m. IST, while the S&P BSE Sensex fell 0.93% to 60,093.80.

Bajaj Finance tumbled more than 8% after reporting moderate growth in new loans and assets under management for the third quarter.

That dragged the heavyweight financials sector down 1.6%. The index outpaced the broader markets' growth for much of last year and was among the best-performing of the 13 major sectors.

"Since the largest financials firm (Bajaj Finance) is pointing at subdued growth, it has had a ripple effect on other financials," said Siddhartha Khemka, head of retailed research at Motilal Oswal Financial Services.

Khemka also said there was caution across segments in the market ahead of the earnings season, which kicks off next week with IT companies' quarterly results.

At its session low, the Nifty 50 breached its 100-day moving average (DMA). The index has traded between its 50- and 100-DMAs for nine straight sessions.

Analysts expect this "sideways" move to continue, with 'buy-on-dip' trades at lower levels and 'profit-booking' at higher levels.

The indexes climbed about 0.4% earlier in the session after the minutes of the Federal Reserve's meeting showed policymakers agreed on slowing the pace of interest rate hikes, although they diverted from market expectations for late-year rate cuts.

Helping cap losses was another slide in oil prices on Wednesday that took the two-day drop to 9.4% on worries about global growth and rising COVID cases in China. Prices rebounded on Thursday but stayed below $79 per barrel.

Lower crude prices aid oil-importing countries like India, where crude constitutes the bulk of the country's import bill. (Reporting by Bharath Rajeswaran in Bengaluru; Editing by Savio D'Souza and Janane Venkatraman)