Indian stock markets are expected to open on a flat note though Asian markets presented mixed signals on Tuesday. A couple of positive economic data such as higher GST collections (Rs 1.3 lakh crore) and manufacturing PMI (55.9) indicate the underlying strength of the Indian economy.

However, analysts are cautious as Indian market valuations are still steep, especially given the high input cost that may check the revival story. Auto sales for this month are not as encouraging as they should be in the festive season, due mainly to supply constraints.

"The sustenance of the trend will depend on the views provided by the Fed regarding the current easy money policy to be announced on Wednesday," said Vinod Nair, Head of Research at Geojit Financial Services.

SGX Nifty at 18,013 indicates a flat opening, as Nifty futures on Monday closed at 18,017 on the NSE. According to analysts, the widening of premium between Nifty futures and underlying Nifty indicates a long build-up. However, Asia-Pacific markets are mixed, with Japan, Australia and Hong Kong slipping, even as Korea and Taiwan score handsome gains.

Overnight, US stocks closed at record highs. The Dow Jones Industrial Average gained 94.28 points to 35,913.84, the S&P 500 about 0.2 per cent at 4,613.67, and the tech-heavy Nasdaq Composite added 0.6 per cent to 15,595.92 - all three closing at a record high.

"Markets are making good moves on both sides and it's difficult to predict any future move. However, we expect some correction in the short term," said Rahul Sharma, Co-Founder, Equity99.

Ruchit Jain, Trading Strategist, 5paisa.com, said: Monday's pullback was led by a broad market participation as all the sectoral indices managed to end in the green. "The options data hints at resistance around 18,000, as the call writers have the highest position at that strike. A sustained move above 18,000 could result in unwinding by the writers, which could then lead momentum towards 18,150-18,200. On the flipside, 17,800 would now be seen as an immediate support for the short term," he added.