The Bombay Stock Exchange (BSE) benchmark Sensex on Monday erased most of its early gains to close just 10 points up amid the government unveiling a five-year road map for fiscal consolidation ahead of the RBI's policy meet on Tuesday.
After resuming on a positive note, the Sensex went up over 118 points to touch the day's high of 18,743.41 on the back of optimism over the reshuffle of Cabinet on Sunday.
The buoyancy was short-lived as the index slowly frittered away most gains due to choppy trade in interest-rate sensitive stocks to end at 18,635.82, just 10.48 points up.
The index ended in positive zone largely helped by RIL and ITC shares.
The National Stock Exchange index Nifty ended 1.30 points up at 5,665.60, after moving between 5,698.30 and 5,645.10.
Worried over high budget deficit derailing growth, Finance Minister P Chidambaram on Monday unveiled a five-year road map for fiscal consolidation to promote investments, contain inflation and take India to high growth trajectory.
The move which comes a day ahead of Reserve Bank's meeting is expected to prod the central bank to lower lending rates but was short on details, said analysts.
Capital goods, realty, power and banks came under selling pressure while refinery, consumer durables and pharma saw some buying. The rupee was under pressure and went below 54-mark against the dollar.
"The market is awaiting RBI's second quarterly monetary policy and anticipating rate cut. However, if once again status quo is maintained, it might disappoint the market," said Rakesh Goyal, Senior Vice President, Bonanza Portfolio.
BHEL was the worst performer on Monday among 30-share Sensex losing over 6 per cent due to disappointing earnings and order book growth, said dealers. Sterlite, Tata Motors, CIL, L&T and HUL also fell.
IT major Wipro, the best performer, gained over 2.5 per cent, led by Hero MotoCorp, Tata Power, Dr Reddy's and RIL.