Like the previous poster said, what works best with waters is to not force them to interact with you. If you set them up correctly and don't force yourself on them, baby water monitors are curious and inquisitive about everything that goes on inside and around their cage. They're pretty much my favorite baby monitor to work with/care for because if they haven't been given a reason to fear people, you can open up the cage and they will walk right up to see what you're doing.
So, your best bet is to leave your lizard alone. Hang out in the room with him, get him used to you being around but not necessarily holding him. The more time you can spend in the room with him, the quicker he'll "tame" down. Eventually your presence in the room shouldn't faze him at all - he should still bask, drink, dig, etc just like he would if you weren't in there.
Good luck!
~jen
-----
"We call them dumb animals, and so they are, for they cannot tell us how they feel, but they do not suffer less because they have no words."
- Anna Sewell (1820-1878)