The BSE Sensex ended ended flat for a second straight session on Monday as software services exporters rose ahead of their quarterly results although sentiment overall was broadly cautious due to the continued U.S. budget standoff.
Outside of some sectors such as the technology services, which are expected to see stronger overseas demand from key markets, analysts worry that weakening economic growth and the rupee volatility will constrain earnings.
At the same time, global shares could come under continued pressure as U.S. lawmakers showed no signs of making any progress to resolve the budget standoff and the looming debt deadline.
Caution is thus likely to prevail, with Infosys Ltd set to report its quarterly results on Friday, while India is due to post industrial output data for August also on the same day.
"The Nifty has closed on a flat note and just near the 5,900 level for a third straight session. This clearly shows that the market is showing strength from lower levels, however caution ahead of quarterly results and weaker global cues have limited the upside too," said Nidhi Saraswat, a senior research analyst at Bonanza Portfolio Ltd.
down 0.1 percent, or 20.85 points, at 19,895.10 after falling as much as 1.3 percent.
The Nifty fell 0.02 percent, or 1.15 points, to 5,906.15.
Among blue-chip shares, banking stocks slumped. ICICI Bank fell 1.6 percent, while HDFC Bank ended 1 percent lower.
The Bank Nifty fell nearly 10 percent in August before rising 6.3 percent in September.
Tata Motors fell 0.6 percent on profit-taking after touching an all-time high of 364.80 rupees on Friday.
However, among stocks that gained, Apollo Tyres rose 4.7 percent after the Indian company and U.S.-based Cooper Tire & Rubber Co disagreed over whether the Indian firm should pay a lower price in its $2.5 billion takeover offer.
Software services exporters extended gains on expectations of strong results for the July-September quarter, given a recovery in the sector's core markets, analysts said.
Tata Consultancy Services ended up 2.8 percent after touching a record high of 2,097.70 rupees, while HCL Technologies closed 2.1 percent higher after reaching an all-time high of 1,129.55 rupees.
Infosys ended 0.2 percent higher ahead of its September-quarter results on Friday.