The BSE Sensex was flat in opening trade on Friday, while the broader Nifty slipped below the 5,650 mark before edging higher. The Sensex has fallen for five straight days and is trading at a four month low.
The Sensex traded 13 points or 0.07 per cent higher at 18,806, while the Nifty traded at 5,667, up 8 points, as of 09.28 a.m. The rupee was nearly unchanged at 54.2975 against the dollar.
The Nifty is trading below its 200 day exponential moving average (DEMA), considered a strong support for markets. Market analyst Sarvendra Srivastava turned bearish after months of optimism as the Nifty broke key levels on Thursday.
"Bearish reversal setups have been broken. The target for Nifty is 5,500," Mr Srivastava said.
Markets have been under pressure after the Reserve Bank stuck to its cautious stance on future rate cuts and the DMK pulled out of the UPA government, creating political uncertainty.
"The domestic political situation is not helping economic worries that we have had over the last year. Markets are concerned if the key reform processes will continue going forward," Mayuresh Joshi said.
35 stocks traded higher on the Nifty led by Coal India, which gained 1.8 per cent. Cement maker ACC, two wheeler maker Bajaj Auto, PSU lender Bank of Baroda and Tata Motors bounced back in early trade.
Bharti Airtel, the top gainer on Thursday, saw profit taking and was the top Nifty loser, down 1.6 per cent. IT stocks came under selling pressure after outperforming the broader indices over the last month.
Infosys and HCL Tech shares traded with over 1 per cent cut, while TCS, India's top IT outsourcer, declined 0.8 per cent.
Asian shares and the euro were pressured on Friday by fears Cyprus may default on its debt, while deteriorating euro zone economic activity further underscored the troubles ailing the region.
The MSCI's broadest index of Asia-Pacific shares outside Japan, inched down 0.1 percent, weighed by a 0.3 percent drop in Australian shares with worries about the stability of the Australian government after a leadership crisis hurting sentiment.
(With inputs from Reuters)