We are interested in understanding the behavior of nematics in inhomogeneous external fields, and investigating the possibility of field induced biaxiality. We report results of our studies of the optical response of the nematic 4-cyano-4-pentylbiphenyl (5CB) sandwiched between two circular glass substrates, with homeotropic alignment, to a spatially varying magnetic field at room temperature. The radially symmetric magnetic field is generated by a ring of rare earth magnets. We describe the experimental setup, our preliminary results, and indicate future research directions.