The blue-chip NSE Nifty 50 index and the S&P BSE Sensex ended up 0.2% each at 16,294.60 and 54,492.84, respectively.
The Nifty Bank index, which rose over 2.3% in the previous session, declined 0.5%, while the public sector banking index dropped 2.2%. The Nifty IT index rose 0.7%.
"We have observed a lackluster movement after two days of positivity in the market. Sentiments in the domestic market are still intact and poised towards positive strength," said Gaurav Garg, head of research, CapitalVia Global Research.
Bharti Airtel Ltd was the top gainer in the Nifty 50 index, rising 4.23% after several brokerages gave a "buy" rating on the stock after its quarterly results.
Indian wireless carrier Vodafone Idea's shares tumbled as much as 24% to their lowest level since May 2020 at 4.55 rupees, a day after its billionaire non-executive chairman stepped down, fueling concerns. Vodafone Idea, however, pulled back to close unchanged.
Shares of Indian state-run refiner Hindustan Petroleum Corp Ltd fell as much as 3.6%, a day after it reported a 36.2% fall in June-quarter net profit.
Panacea Biotec Ltd gained 3% after the company reported that it had agreed to produce up to 25 million doses of the Sputnik V COVID-19 vaccine using the drug substance made by Russia's Generium.
Indian markets are closely watching the country's central bank policy outcome on Friday for cues on liquidity even as it is mostly expected to stay put on rates.
(Reporting by Nallur Sethuraman in Bengaluru; Editing by Shailesh Kuber)