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 Indian shares ended flat after struggling for direction for much of a volatile session on Monday, as investors braced for local retail inflation data and the U.S. Federal Reserve's monetary policy decision.

The Nifty 50 index closed flat at 18,497.15, and the S&P BSE Sensex dipped 0.08% to end at 62,130.57.

Both benchmarks fell 0.8% at the open before erasing losses later, though they struggled to move firmly in one direction, as they have since last week after the Reserve Bank of India hiked interest rates and took a hawkish stance.

"The consolidation and intraday volatility, like in today's session, will continue ... as investors eye key events in the U.S. and domestic retail inflation data", said Ajit Mishra, Vice President - Technical Research at Religare Broking.

If the Nifty falls "below 18,300, the resistance level, the tone would turn slightly bearish," he added.

India's domestic consumer price inflation (CPI) likely cooled to a nine-month low of 6.40% in November, but stayed above the RBI's 2%-6% tolerance range for the tenth straight month, data at 5:30 p.m. IST is expected to show.

U.S. inflation data is due on Tuesday. While investors have largely priced in the 50 basis point (bps) rate hike from the Fed on Wednesday, the focus is on its economic projections, especially after some relatively strong data points last week.

The U.S. inflation scenario is also key for Indian IT companies as they get a big chunk of their revenue from that country. The Fed's rate hikes have led to fears of a U.S. recession and, as a result, an outsized hit to IT companies' results.

HCL Technologies' revenue growth warning on Friday gave credence to those fears and sparked a tumble in IT stocks. IT was the top loser among the major sectoral indexes for the second consecutive session, shedding 0.40% on the day.

Adding to the pressure, foreign institutional investors have remained net sellers for five sessions in a row through Friday — the longest since an eight-day streak that ended on Oct. 19.

Financial stocks, the most heavily weighted among major sectors, rose 0.12% and helped steady the market.

Graphic: PSU banks, oil & gas stocks offset I.T. losses https://www.reuters.com/graphics/SECTORAL-DEC12/DEC12-SECTORAL/akpeqqqzlpr/chart.png

However, the mid-cap and small-cap stocks closed 0.36% and 0.55% higher, respectively.