After plunging to nearly a three-month low at 17,786.13, the benchmark 30-scrip Sensex rebounded smartly on last two days of the week but still ended lower by nearly 60 points over the previous week's closing.
The trading for the week started on a subdued note on persisting concerns over inflation and high interest rates as well as weak global cues on deepening euro-zone debt crisis.
Analysts said investors sold across-the-board in the early part of the week which was attributable to the expiry of the derivative contracts for May on Thursday.
However, short covering on Thursday and follow-up buying on the next day helped Sensex to recover major part of its early losses.
The Sensex closed the week at 18,266.10, a fall of 59.99 points or 0.33 per cent over the previous week's close. Intra-week, it dipped to a three-month low of 17,786.13.
Fitch had downgraded Greek's debt rating over the last week-end while Standard & Poor downgraded outlook for Italy's rating that led to concerns over the sovereign debt crisis in Europe and impacted the market sentiment across the globe.
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However, most of the markets overseas surged after mid-week on speculations that China would increase purchases of Euro bonds.
Stock markets have been under pressure most of this year, about 11% down so far, due to high inflation, soaring oil prices, rising interest rates and below-expected fourth quarter earnings by key corporates.
"Indian markets got trapped in the worldwide selling of risky assets and the general flight-to-safety trend. The uptick in the Indian market in the last two days can be termed as more of a technical recovery after the recent weakness.
It is a minor pullback and not a trend reversal, as the fundamentals are still weighed down by high inflation and rising interest rates," said IIFL Head of Research (India Private Clients) Amar Ambani.
However, the market shrugged off the rise in food inflation which rose to 8.55% for week ended May 14 from 7.47% in the preceding week.
Among the sectoral indices, the BSE-Power went down by 2.22% followed by BSE-IT (1.86%), BSE-CG (1.75%) and BSE-Auto (1.45%).
The BSE-IT plunged on reports that software bellwether Infosys Tech has received a legal notice from US district court over the use of its business visas.
The smart gains by RIL, ICICI Bank, ITC, HUL, Hero Honda, ONGC, Tata Steel, Hindalco and Reliance Com were offset by fall in Tata Motor, BHEL, NTPC, Tata Power, TCS, Infosys Tech, SBI, Wipro and Rel Infra.
Tata Motors was the top loser from the Sensex during the week after the company announced late Thursday that the current macro economic factors have the potential to adversely impact commercial vehicle demand.
Overall, 16 out of the 30 Sensex scrips closed with gains, while others finished with losses.
Tata Motor tumbled by 6.86%, BHEL (6.67%), SBI (3.77%), TCS (2.97%), NTper cent (2.60%), Tata Power (2.55%), Infosys (2.20%), REL Infra (1.99%), Wipro (1.30%), Bajaj Atuo (1.21%) and DLF (1.08%).
However, ONGC rose by 3.27%, Hindalco (2.76%), Hero Honda (2.73%), RIL (2.70%), HUL (2.45%), ICICI Bank (2.37%), ITC (1.78%), M&M (1.65%) and Tata Steel (1.21%).
The total turnover at BSE and NSE rose to Rs 13,782 crore and Rs 55,258 crore respectively compared to Rs 12,734 crore and Rs 49,242 cr last week.