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Benchmark indices continue to trade in a narrow range with Sensex and Nifty swinging between negative and positive zone .
Markets will remain cautious ahead of the Reserve Bank of India (RBI) and the US Federal Reserve's meet this week.
By 10:20 AM, the Sensex was higher by 13 points at 20,729 mark and the Nifty gained by 2 points at 6,170 levels.
Market participants said expectations of a rise in interest rates by RBI and Fed comments on its stimulus programme were likely to keep the market nervous in the week ahead, which will also see the issue of the wholesale price inflation figures.
"Based on the data coming from the US, markets expect tapering of the Fed's stimulus programme to start sooner than later. If the Fed announces this could start in January itself, that would be a big negative for the markets," said Dipen Shah, senior vice-president (research), Kotak Securities.
The Fed will hold its two-day Federal Open Market Committee (FOMC) meeting on Tuesday and Wednesday, followed by a press conference by Fed Chairman Ben Bernanke.
Asian share markets were mostly lower on Monday with investors just a few short days away from finding out the fate of U.S. monetary stimulus, in what looks set to be a very close call indeed.
Shanghai slipped 1.4 percent as a measure of growth in China's vast factory sector slowed to a three-month low in December as reduced output offset a pickup in new orders.
The flash Markit/HSBC Purchasing Managers' Index (PMI) fell to 50.5 from November's final reading of 50.8, but for a fifth consecutive month remained above the 50 line which separates expansion from contraction.
Japan's Nikkei lost 1.2% despite a generally upbeat survey of the country's business sector.
Back home, rupee is trading at 62.15 per dollar; the currency is seen flattish in cautious trading ahead of mid-week U.S. Federal Reserve meeting and Reserve Bank of India monetary policy.
On the sectoral front, BSE IT, Consumer Durable and Capital Goods indices have gained by 1% each. BSE Oil & Gas and Metal indices are trading marginally lower.
The main gainers on the Sensex at this hour include Infosys, ICICI Bank, TCS, Sesa Sterlite and L&T, all gaining between 1-2%.
On the losing side, JSPL, Hindalco, Hero Moto, Maruti Suzuki and M&M declined between 1-2%.
Among other shares, SpiceJet has rallied over 10% at Rs 17.30 after the company said it has signed a three-year interline agreement with Tigerair, Singapore’s largest budget airline, to pave the way for greater connectivity between flights operated by both carriers.
Aurobindo Pharma is trading higher by 2.4% at Rs 317, extending its Friday’s 4% rally, after said it has received the final approval from the U.S. health regulator to manufacture and market Duloxetine Hydrochloride Delayed-Release capsules, an anti-depressant drug, in the American market.
Shares of GlaxoSmithKline Pharmaceuticals has surged nearly 20% at Rs 2,952 in early morning deals on the BSE after its parent company GlaxoSmithKline plc announced a voluntary open offer to increase its stake in its Indian arm, from 50.7% to up to 75% at a price of Rs 3,100 per share.
The broader markets are outperforming the benchmark indices- BSE Midcap and Smallcap indices are up by nearly 0.4% each.
The market breadth in BSE remains positive with 700 shares advancing and 533 shares declining.
