Participants are keeping an eye on the winter session of Parliament, which started on Wednesday, and US fiscal policies to be followed by president-elect Donald Trump. Investors are still in a risk-off mode, taking cues from global markets that were on the back foot ahead of Fed Chair Janet Yellen's testimony on Thursday. Sensex started off on a strong footing and advanced to a high of 26,621.4. It saw profit-booking at higher levels, falling to 26,239, before settling six points, or 0.02 per cent, lower at 26,298.7.
Nifty managed to close in the positive zone, with a small gain of 3.15 points, or 0.04 per cent, at 8,111.6, after shuttling between 8,210 and 8,089.4. "The market rebounded as investors used drop in valuation while selling at higher levels pulled back market to close flat," said Vinod Nair, head of research, Geojit BNP Paribas Financial Services.
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Easing inflation numbers offering more room to central bank to lower benchmark borrowing rate gave investors some comfort. Rupee remained on a weak wicket against the dollar, losing 20 paise to close at 67.94. The BSE mid-cap index provisionally rose 0.56 per cent, while the small-cap index gained 0.05 per cent.
Meanwhile, foreign funds sold shares worth Rs 2,353.8 crore on Tuesday, going by provisional data released by stock exchanges. Abroad, most Asian stocks ended higher, tracking overnight gains in US markets, as energy shares climbed on rising crude oil prices.
Key indices in Asia like those of Japan, South Korea, and Taiwan, rose 0.35 per cent to 1.10 per cent while indices in Hong Kong, China, and Singapore fell 0.06 to 0.19 per cent. European markets were trading lower in afternoon trade as key indices in France, Germany, and the UK moved down 0.19 per cent to 0.31 per cent.