The benchmark Sensex gave up most of today's gains and managed to close 21 points higher after a late bout of profit booking as heavyweights ITC and ONGC advanced while tech stocks Infosys and TCS declined.
Stocks had traded firm for most part of the day on global cues and continued capital inflows.
Asian stock indices closed higher after US economic growth beat expectations and the International Monetary Fund said it would raise its outlook for the world's largest economy.
The 30-share S&P BSE Sensex resumed stable and moved in a range of about 150 points before settling at 21,101.03, a rise of 21.31 points or 0.10 per cent. Last Friday, it had spurted by 371.10 points or 1.79 per cent.
"Positive global cues and buying in rate-sensitive stocks boosted the market sentiment," said Nidhi Saraswat, Senior Research Analyst at Bonanza Portfolio Ltd.
The 50-share CNX Nifty on the National Stock Exchange edged up 10.25 points or 0.16 per cent to 6,284.50. The SX40 on the MCX Stock Exchange closed 33.67 points up at 12,559.21.
Ten of the 12 BSE sectoral indices advanced, with the recently battered realty, metal and capital goods segments leading the pack, while IT and teck stocks suffered the most on profit selling after a strong bull run in past few days.
The Small Cap and Mid Cap indices outperformed the Sensex with gains of 1.2 per cent and 1.26 per cent, respectively, indicating the return of retail investors.
Foreign institutional investors continued their buying spree with net stock purchases of Rs 990.19 crore last Friday, according to provisional data with the stock exchanges.
Infosys, the top loser on the Sensex, fell 2.35 per cent after V Balakrishnan became the eighth top executive to quit the company in the past six months.
Stocks also fell ahead of the expiry of derivative contracts on Thursday.
RBI Governor Raghuram Rajan today said fighting rising prices will continue to be the central bank's priority and a call on raising interest rates will be taken after factoring in more data.
