In listless trade, benchmark Sensex on Tuesday ended about eight points up at 27,403.54 after surrendering early gains on the back of weakness in global markets and profit-booking by foreign funds.
Gains in shares of BHEL, NTPC, Dr Reddys and Axis Bank helped the index complete its third straight session of rise.
Traders said initial gains of about 83 points were mostly frittered away on profit selling. While the mood was initially positive after the Cabinet on Monday made it easier to acquire land in key sectors, weak sentiment across the globe on a sell-off in commodities and political uncertainty in Greece led to the emergence of caution, they added.
Refinery, power and metal counters were at the receiving end while consumer durables, capital goods and banking shares attracted good buying support.
Second-tier stocks too were in keen demand on good buying support from retail investors. Small and mid cap indices outshined the Sensex.
The BSE 30-share indicator resumed at the day's high level of 27,478.30, but later declined to a low of 27,312.29 before concluding at 27,403.54 - a minor rise of 7.81 points or 0.03%. In the previous two days, it rose 187.12 points.
"Lack of market cues and liquidity drench owing to festive season in the West kept markets sideways. Optimism over new ordinances kept Indian markets mildly bullish but the same failed to raise market risk appetite as FIIs were seen cutting their positions from equity and debt as well," said Rakesh Goyal, senior vice president, Bonanza Portfolio.
The broader 50-issue CNX Nifty of the NSE also edged up by 1.95 points, or 0.02%, to 8,248.25.
Meanwhile, Foreign Portfolio Investors (FPIs) sold shares worth Rs 204.22 crore on Monday, as per provisional data available with stock exchanges.
Jignesh Chaudhary, head of research, Veracity Broking Services said: "Local equity market traded slightly negative throughout the day but in thin range as we have seen the sharp fall in volumes due to Christmas and year-end holidays in the US, Europe and several key markets."
Asian stocks closed lower following a sharp sell-off in commodities and caution over political uncertainty in Greece.
Key benchmark indices in China, Hong Kong, Japan, South Korea, Singapore and Taiwan fell by 0.5% to 1.57%.
European markets too were quoting weak in their late morning deals on Tuesday after the release of disappointing inflation data from Spain and concerns over political tension in Greece.
The CAC was down by 0.67%, the DAX by 0.59% and the FTSE by 0.65%.
Eleven out of the 30-share Sensex pack finished with gains while others settled with losses. Major gainers were BHEL 1.51%, NTPC 1.25%, Dr Reddy's Lab 1.24%, Axis Bank 0.99%, SBI 0.78%, HDFC 0.53% and HDFC Bank 0.51%.
Hero MotoCorp declined by 2.09%, Tata Steel 1.94%, RIL 1.83%, ONGC 1.46%, Bajaj Auto 1.36%, Sesa Sterlite 1.35% and Coal India 0.94% were among the Sensex laggards.
Among the S&P BSE sectoral indices, Oil&Gas dropped by 1.22%, power by 1.14% and metal 1.09% while Consumer Durables rose by 1.38%, Capital Goods by 1.03% and Bankex by 0.68%.
Total market breadth was slightly positive as 1,438 stocks ended in the green while 1,423 concluded in the red and 136 held stable. The total turnover was slightly low at almost over Rs 2,241 crore from Rs 2,260.96 crore on Monday.