Indian shares gave up most of their early gains as waning hopes of tax cuts to spur demand hit automakers and offset a boost from retreating oil prices.
Shares in other Asian markets were largely flat on Wednesday ahead of an expected U.S. interest rate cut, while investors also assessed the impact of higher crude prices in the wake of the weekend attacks on Saudi oil facilities.
"(India) markets are being kept subdued by geopolitical risks arising from the Saudi situation, and the lack of reforms locally which can boost slowing growth," said Sumit Pokharna, vice-president at Kotak Securities.
India's goods and services tax panel is unlikely to approve lowering the tax for the auto and allied components sector this week, as a study has warned of major revenue losses, Reuters reported on Tuesday, citing two government officials.
Auto companies have long argued that a tax cut is necessary to spur demand and lift the ailing sector.
Eicher Motors Ltd and Maruti Suzuki India Ltd fell over 2% each to their lowest in nearly two weeks, while the Nifty Auto index fell as much as 1.4%.
The broader NSE Nifty was up 0.04% at 10,822.3 as of 0456 GMT, while the benchmark BSE Sensex was 0.16% higher at 36,536.74.
Biscuit maker Britannia Industries Ltd was the biggest loser on the NSE index, falling as much as 3.9% to an over three-week low.
Dewan Housing Finance Corporation Ltd dropped 5.6% after Reuters reported that a plan to rescue the debt-laden company had hit a major roadblock as only a small segment of bondholders agreed to be on board the proposed resolution.
Oil marketing companies rose as crude extended losses from the previous session, after Saudi Arabia's energy minister said the kingdom will restore lost oil production by the end of the month.
The stocks were further bolstered by news that India was looking to raise oil imports from Russia.
Bharat Petroleum Corporation Ltd climbed 3.6% and was the top percentage gainer on the NSE index, while Indian Oil Corporation Ltd and Hindustan Petroleum Corp Ltd advanced 2.6% and 4%, respectively.
Bajaj Finance Ltd rose 2.4% after the non-banking finance firm approved raising up to 85 billion rupees through a qualified institutions placement.
($1 = 71.4730 Indian rupees)
(Reporting by Chris Thomas in Bengaluru; Editing by Saumyadeb Chakrabarty)