The BSE Sensex edged higher on Monday, rebounding from two-month lows, as Bharti Airtel advanced after more brokerages upgraded the stock and auto makers rose on hopes of rising sales during the festival season.
However, the Nifty fell, with sentiment cautious ahead of the winter session of parliament which is set to start on Thursday.
Parliament is due to meet amid a slew of negative news flows around the current account and fiscal deficits, a slowing economy and the prospect of no monetary relief until 2013.
Analysts says the government's will to pass reforms is critical to revive the stock markets that have faltered over the past month and a half.
"Going by the track record of the opposition, what happened in last session, there can be drama that need not be positive," said V.K. Vijayakumar, an investment strategist at Geojit BNP Paribas.
The market also remains sceptical about the head winds in the eurozone, added Vijayakumar.
The benchmark BSE Sensex rose 0.16 percent, or 29.63 points, to end at 18,339, snapping six previous consecutive sessions of falls that saw the benchmark index retreat a total of 3.1 percent.
However, the broader Nifty fell 0.05 percent, or 2.65 points, to 5571.40, marking its lowest close since September 20.
Telecom stocks extended a recent rally after last week's auction of 2G spectrum fetched lower prices than the government had targeted.
Shares in Bharti Airtel rose 2.7 percent, posting five straight days of gains as more brokerages upgraded the stock after the 2G spectrum auction.
Credit Suisse and Goldman Sachs upgraded Bharti to the equivalent of 'buy', citing greater clarity on the regulatory front and reduced competitiveness in the domestic sector.
Both Maruti and Mahindra & Mahindra will outperform the sector in the near-term, Indian brokerage Sharekhan said in an email to clients, citing a "strong" order backlog.
Shares in ITC Ltd
Shares in Honeywell Automation India Ltd
However, Honeywell Automation called the report incorrect in a statement to the exchange.
Among the decliners, rate-sensitive stocks fell on worries that last week's data showing easing inflation is unlikely to result in a repo rate cut this year.
HDFC fell 1.3 percent, while Axis Bank ended 1 percent lower.
Shares in India's Tata Global Beverages fell 5.33 percent after Morgan Stanley downgraded the stock to "underweight" from "equal weight".
Morgan Stanley said the contribution from the Starbucks JV will be limited and recommended booking profits on Tata Global.