The BSE Sensex recovered from the day's low to end nearly flat on Monday, led by a rally in state-run banks such as Punjab National Bank
Traders said the market was now waiting for fresh cues on reforms from the government to revive the investment cycle to boost growth.
The parliament is expected to amend the banking laws that includes raising the limit on shareholders' voting rights in public and private sector banks, a step seen largely positive towards the government's reform drive.
Rate-sensitive sectors such as banks, real estate and automobile will remain in focus this week as the outcome of two key data points, industrial output and wholesale price index, will set the tone for the central bank's policy meeting on December 18.
"Markets would continue to find FII buying at lower levels due to support from reform measures, cut in interest rate and earnings," said Vivek Mahajan, head of research, Aditya Birla Money.
The benchmark BSE index fell 0.07 percent, or 14.41 points, to end at 19,409.69.
The broader NSE index rose 0.03 percent, or 1.5 points, to end at 5,908.90.
On Monday bank stocks were boosted on expectations of an increase in voting rights and cheap valuations in some banks, Mahajan said.
If approved, the cap on voting rights for investors in private sector banks such as HDFC Bank Ltd
Likely candidates for banking licences rose as traders were expecting the banking bill to be passed which the Reserve Bank of India said was a pre-condition to invite new banking licences. Reliance Capital Ltd
India's No.3 software services provider Wipro Ltd
Dealers also attributed gains to reports in the Economic Times newspaper that Wipro has bagged a $200-million (10.9 billion rupees) technology service contract in Europe, citing a person with direct knowledge of the negotiations.
Leading the fall, Reliance Industries
Cairn India Ltd
The investment bank also removed the stock from its Asia Pacific buy list.
Shares in Uttar Pradesh-based sugar companies fell after the state raised the price at which sugar mills buy the new season crop by up to 16 per cent to 290 rupees per 100 kg.
Morgan Stanley said in a note the hike in the price of cane in the current sugar season by 2,920 rupees per tonne is much higher than expectations of a 2,820 rupees per tonne hike.