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Markets opened marginally higher but failed to sustain gains at higher levels amid profit taking in IT and metal shares.
At 9:40AM, the 30-share Sensex was up 95 points at 29,374 and the 50-share Nifty was up 9 points at 8,844.
The US Federal Reserve will meet for its two-day policy meet, the first in 2015, on Tuesday. Analysts expect it to maintain its earlier stance of remaining 'patient' on increasing the key rates.
Globally. equity markets have largely shrugged off the outcome of Greece election. The victor Syriza Party has promised to re-negotiate Greece debts with its international creditors and bring a halt to the austerity measures.
On the domestic front, traders will watch for the fiscal deficit numbers due on Friday along with corporate earnings in this week. F&O expiry on Thursday is likely to keep investors cautious in the week.
Meanwhile, foreign institutional investors were net buyers in Indian equities worth Rs 2,020 crore on Friday, as per provisional stock exchange data.
Asian shares moved higher on Tuesday and the euro clung to rare gains, relieved that European markets had weathered Greece's election outcome without much disruption. Nikkei has gained around 1.4% while the Chinese markets are trading lower. Shanghai Composite is trading lower by 0.5% and Hang Seng index has lost 0.4%.
Overnight, US markets ended marginally higher after bad weather in New York thinned trading volumes. The Dow Jones industrial average rose 0.03%, the S&P 500 gained 0.26% and the Nasdaq Composite added or 0.29%
The rally in early trades was seen in stocks across sectors with Tata Motors up over 2% contributing the most to the Sensex gains.
In the financials segment, HDFC, HDFC Bank, ICICI Bank, Axis Bank 1-1.6% each.
Capital goods shares BHEL and L&T were up over 2% each on hopes of order inflows after the Indo-US treaty for civilian nuclear projects.
However, index heavyweight Infosys was down over 2% while Reliance Industries slipped 0.6%.
In the metal pack, Hindalco, Tata Steel and Sesa Sterlite were down 0.8-2.8% each.
Pharma majors Sun Pharma and Dr Reddy's Labs were down 1-2.7% each.
In the broader market, the BSE Mid-cap and Small-cap indices were up 0.3-0.4% each.
Market breadth was strong with 1,031 gainers and 632 losers on the BSE.
