Indian shares climbed to a record in opening trade on Monday before losing steam as investors turned their focus to a central bank policy meeting later this week.
Index heavyweights ICICI Bank Ltd, State Bank of India and Reliance Industries Ltd were the top boost, while HDFC Bank and IT stocks were the biggest drag.
"Markets will look out for multiple central bank meetings this week, especially the U.S. Fed meet," said AK Prabhakar, head of research, IDBI Capital.
While inflation has been above the central bank's medium-term target of 4 percent for eight months and is expected to stay that way through to the end of 2019, economists in a Reuters poll were almost evenly split over the next rate hike.
Thirty-seven of 63 economists said the Reserve Bank of India will raise rates again at its two-day policy meeting on Tuesday and Wednesday and 22 respondents said the next rate hike would come by end-2018 or in the January-March quarter next year.
Globally, the U.S. Federal Reserve meets on Tuesday and Wednesday and is widely expected to stand pat while reaffirming the outlook for further gradual rate rises. The market is almost fully priced for a hike in September and leaning towards a further move before year-end.
A Bank of Japan policy meeting that ends on Tuesday has taken on greater importance amid talk it could tweak its massive asset-buying campaign.
The benchmark BSE Sensex rose 0.4 percent to a record 37,496.80 and was last up 0.18 percent. The broader NSE Nifty climbed 0.3 percent to a life high of 11,309.35 and was last up 0.10 percent.
ICICI Bank gained of up to 4.5 percent after the private sector lender said on Friday its gross bad loan additions in April-June fell to the lowest in 11 quarters.
Reliance Industries climbed 2.4 percent to a record after the energy to retail conglomerate posted an 8 percent rise in quarterly standalone net profit on Friday.
State-run banks advanced with the public sector banking index rising 3.52 percent after last week's 10.4 percent gain.
State Bank of India Ltd added 4.4 percent to hit its highest since Feb. 9 after the lender raised interest rates on retail domestic term deposits below 10 million rupees for more than 1-year tenors.
Bank of Baroda Ltd surged 9.1 percent to a 17-week top after it reported a two-fold jump in first-quarter profit on Friday.
HDFC Bank was the top loser on the NSE index with a drop of 1.48 percent ahead of results.
IT stocks were also in negative territory with Infosys Ltd down 1 percent and HCL Technologies Ltd 1.4 percent lower.