Equity benchmarks rallied after a sedate start on Wednesday, led by demand for banks and IT shares. The Sensex gained 188 points to close at 18414.45, and the Nifty rose 64 points to 5558.70.
However, brokers cautioned that the outlook remained cautious as the market was lacking triggers for a sustainable uptrend.
Reliance Communications led gainers, with the stock rising 13 percent to Rs 73.20 on expectations that the company will be able to come up a credible plan to reduce debt on the balance sheet.
J&K Bank, Reliance Infra, Adani Ports and Hexaware Tech were the other key gainers, up 4-5 percent.
IT shares firmed up ahead of Infosys fourth quarter earnings this Friday, and beaten down bank stocks recovered with brokers attributing it to short covering of positions.
“Politics is overriding things. So, I believe economic outlook, economic reforms or government actions will definitely take a backseat in this kind of a scenario,” Nishchal Maheshwari, head of research, Edelweiss Capital told CNBC-TV18 in an interview earlier today.
Near term events the market will be closely eyeing include trade balance data, consumer price inflation for March and industrial output for February.
Foreign funds have reduced their purchases of Indian equities, and that has been on eof the key factors putting pressure on the market.
Vetri Subramaniam of Religare Mutual Fund says one should not read too much into recent outflow of foreign portfolio money.
"Keep in mind that we actually got a fairly large sum of money during the previous 12 months. The reasons why the money may have stopped coming in or they are going elsewhere, could be a variety of things," he told CNBC-TV18 in an interview.
"Let us not forget that a lot of portfolio flows are always momentum chasing. If one starts to see momentum in some of the markets I am quite sure that it is the natural tendency of money to flow towards those markets," he said.
Key laggards today included MMTC, Mahindra & Mahindra Financial Services, Glaxosmithkline Consumer, Container Corp and Cummins India, down 2-4 percent.
The market recovered in afternoon trade led by banks, technology and capital goods. The Sensex surged above 200 points on short covering and was at 18441.09 up 214.61 points. The Nifty jumped 65.25 points to be at 5560.35.
Key equity benchmarks continued to trade volatile, with the Nifty struggling to hold the 5500 mark, pulled lower by commodity and FMCG stocks.
The market seemed to have perked up a bit. The Sensex was up 81.92 points at 18308.40 and the Nifty added 22.45 points points to be at 5517.95. Midcaps were still reeling under pressure while technology stocks continued to hold gains since morning.
It was a quiet session for the market in late morning trade. Traders will be closely monitoring the opening of European markets.
The market had become flat amid volatile trading session in the initial trading hour of the day. The Sensex was up 15.74 points at 18242.22 while the Nifty gained 1.80 points to 5496.90.
The market opens on a steady note ahead of trade balance data today which will picture the annual current account deficit numbers for FY13. Finance Minister is confident that fiscal deficit will be lower than 5.2 percent.
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