The Sensex and Nifty were largely flat amid weak Asian markets, and gains in energy stocks were offset by losses in financial and auto stocks.
Brokers said domestic sentiment turned weak as WPI inflation for January jumped to 5.25 per cent from 3.39 per cent in the previous month.
At 3.10 p.m., the 30-share BSE index Sensex was up 4.06 points or 0.01 per cent at 28,355.68 and the 50-share NSE index Nifty was up 0.05 points or 0.00 per cent at 8,801.20.
Barring TECk, IT and banking, all other BSE sectoral indices were trading in the red. Among them, auto index fell the most by 0.97 per cent, metal 0.89 per cent, PSU 0.61 per cent and consumer durables 0.47 per cent. On the other hand, TECk index was up 0.36 per cent, IT 0.15 per cent and banking 0.11 per cent.
Top five Sensex gainers were Bharti Airtel (+3.00%), GAIL (+2.84%), Reliance (+1.94%), ONGC (+1.8%) and ICICI Bank (+1.38%), while the major losers were Tata Motors (-3.6%), Sun Pharma (-2.08%), Hero MotoCorp (-1.93%), HUL (-1.71%) and Maruti (-1.43%).
Foreign institutional inflows have been subdued after the government decided to ban higher denomination notes on November 8.
“There isn't much action driving the market at the moment ... It will take another quarter to recover (from demonetisation effect),” said Kaushik Mukherjee, Partner, BMR Legal.
Foreign investors have net purchased shares worth net $326.06 million so far this month and $319.67 million this year.. They had net bought stocks worth $2.90 billion in 2016, down from a net $3.27 billion invested in 2015.
State-run Hindustan Petroleum Corp's shares fell as much as 3.5 per cent in their biggest intraday percent drop since December 15, 2016 after December-quarter average gross refining margin fell to $5.57 per barrel.
Asian shares inched to 19-month highs on Tuesday as the potential for economic stimulus in the United States lifted the dollar, bond yields and Wall Street stocks.
The dollar was also bolstered by speculation the head of the Federal Reserve would underline the prospects of more US rate hikes when she testifies to Congress later on Tuesday.