At 11 a.m. (0530 GMT), the main 30-share BSE index was up 0.3 percent at 16,018.66, with 19 of its components in the green, after falling 0.3 percent at one stage.
Mobile operator Reliance Communications gained 4.5 percent after India’s telecoms commission accepted the sector regulator’s recommendation on mergers & acquisitions rules by and large.
Top mobile operator Bharti Airtel and smaller rival Idea Cellular were little changed.
“The market is circumspect and no one really wants to take a bet,” said Deven Choksey, managing director of brokerage K.R. Choksey.
With many money managers at foreign funds on holiday before the year ends, there was little steam to sustain the market’s 1.5 percent rise on Monday, he said.
Arun Kejriwal, strategist at research firm KRIS, said the previous day’s rally was on relatively lighter volume and the market needed policy initiatives by the government to boost flagging growth.
The parliament will begin to debate the Lokpal bill on Tuesday as activist Anna Hazare renews his anti-corruption protest in Mumbai to press for the early passage of a tough law.
Hazare’s movement has kept Prime Minister Manmohan Singh on the ropes through the year, impacting the pace of economic reform in Asia’s third largest economy as it battles high inflation and slowing economic growth.
“There is resentment among people against corruption. But markets are unlikely to be impacted as long as the protest remains peaceful,” said Kejriwal.
Lenders were among the top losers as the BSE bank index fell about 0.6 percent. State Bank of India, the country top lender, shed 0.5 percent while private-sector HDFC Bank shed 1 percent.
There are concerns about asset quality of banks as borrowers face difficulty to repay loans following sharp increases in interest rates and slowing economic growth.
Tata Consultancy Services dropped 0.3 percent as gloom continued over European markets, which contribute a significant chunk of revenue to India’s showcase $76-billion software services sector.
The 50-share NSE index was up 0.34 percent at 4,795.60. In the broader market, there were about two gainers for every loser, on volume of 100 million shares.
The MSCI’s broadest index of Asia Pacific shares outside Japan was trading down 0.31 percent.
STOCKS ON THE MOVE
Bharti Shipyard rose as much as 7.7 percent after the company said late on Monday that its board had approved a proposal to restructure 28.
Apollo Hospitals rose 3.4 percent after a newspaper report that an arm of Malaysian sovereign fund Khazanah Nasional Bhd has converted global depositary receipts (GDRs) worth 2.13 billion rupees into equity shares in the Indian hospital chain.
TOP 3 BY VOLUME
* IFCI with 3.9 million shares
* Infomedia 18 with 3.1 million shares
* GVK Power with 2.9 million shares