The Sensex was up 20 points, while the Nifty was down 6 points at 6697 points. Among the early gainers in trade were the banking stocks like Yes Bank, Bank of India and Canara Bank ahead of the RBI's Monetary policy scheduled for 11 am.
Reliance Industries which surged on Monday was trading up even as the company will continue to supply gas at $4.2 a unit to 16 fertiliser units.
Lakshmi Vilas Bank was up on reports that the the private lender has sought market regulator Sebi's approval to raise Rs 505 crore through rights issue.
Software stocks continued to rally in trade with Tata Consultancy Services and Infosys among the early gainers.
HCL Tech and Wipro too joined the list of early gainers. Among the losers in trade from the Nifty were BPCL, HDFC and Hindalco Industries.
PSU banking stocks which had shown stellar gains in the last few trading sessions were trading lower. Notable losers in trade were Oriental Bank of Commerce, Bank of Baroda and Canara Bank.
Small cap banking stocks like Bank of Maharashtra and United Bank also lost ground. Meanwhile, markets across Asia were trading with gains, following positive comments from US Fed Chair Janet Yellen.