The 30-share index was trading 18.58 points or 0.05 per cent up at 36,995.43; while the broader Nifty slipped 8.55 points or 0.07 per cent to 10,943.05 in morning trade.

In the previous session on Tuesday, the 30-share index closed at 36,976.85, up by 277.01 points, or 0.75 per cent, and the Nifty ended 85.65 points, or 0.79 per cent, higher at 10,948.25 points.

Top gainers in the Sensex pack during early trade included Yes Bank, Hero MotoCorp, IndusInd Bank, HUL, PowerGrid, TechM, Infosys and Sun Pharma, rising up to 4 per cent.

While, Tata Steel, M&M, Axis Bank, Kotak Bank and HDFC were among the top laggards, shedding up to 3 per cent. According to traders, investors were cautious ahead of the central bank's monetary policy outcome.

The Monetary Policy Committee (MPC) headed by RBI Governor Shaktikanta Das will announce the decision of the third bi-monthly policy review of the current financial year around noon, amid expectations of yet another 25 basis points cut in lending rate to boost the slowing economy.

Besides rate cut, the industry also expects the six-member MPC to take steps to improve liquidity situation and also ensure transmission of rate cuts to borrowers by the banks.

Further, market is jittery tracking weakness in other Asian equities amid escalation in trade tensions between the US and China and unabated foreign fund outflow, experts said.

Foreign portfolio investors sold shares worth a net of Rs 2,107.93 crore on Tuesday, while domestic institutional investors (DIIs) bought shares worth Rs 2,289.05 crore, provisional data showed. Elsewhere in Asia, Hang Seng, Kospi, Shanghai Composite Index and Nikkei were trading in the red in their respective late morning sessions.

On the other hand, bourses on Wall Street ended significantly higher on Tuesday. The rupee, meanwhile, depreciated 9 paise against its previous close to trade at 70.90 in early trade.