Indian shares edged lower on Tuesday in line with early weakness in Asian peers, due to losses in financials and healthcare stocks, but gains in oil marketers and an upbeat sentiment over a strong set of inflation data helped cap losses.
The broader NSE Nifty was down 0.16 percent at 10,465.15 as of 0524 GMT, while the benchmark BSE Sensex was 0.18 percent trading lower at 34,751.88.
Asian shares, which saw a sell-off earlier in the day after technology stocks dropped overnight on Wall Street, pared losses on hopes of a de-escalation of the Sino-U.S. tariff war.
"What's notable about our market is that we're only flat; many participants would have expected a similar kind of drop in our markets, but that has not happened," said Sunil Sharma, chief investment officer with Sanctum Wealth Management.
A decline in crude prices, a set of healthy earnings growth when adjusted for public-sector banks, and strong mutual fund flows have helped stem the losses, added Sharma.
Oil prices fell by around 1 percent on Tuesday after U.S. President Donald Trump put pressure on OPEC to not cut supply to prop up the market.
Retail inflation rate, which includes food and energy prices, dropped sharply in October to 3.31 percent on a year-on-year basis, the slowest pace in 13 months and below the Reserve Bank of India's (RBI) medium-term target of 4 percent for a third straight month.
This could bode well for the share market, as structurally low inflation delivers real earnings growth, said Sharma.
Sun Pharmaceutical Industries Ltd was the top drag on the Nifty, with shares falling as much as 3.7 percent ahead of its quarterly results.
Tata Motors Ltd was the biggest loser, with the stock down as much as 3.8 percent at a near two-week low.
Shares in ICICI Bank Ltd and top public-sector lender State Bank of India fell 1.3 percent each.
Oil marketing companies cheered the decline in crude prices, with Bharat Petroleum Corporation Ltd, Hindustan Petroleum Corp Ltd and Indian Oil Corp Ltd rising in the range of 3.3 percent-4.3 percent.