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Markets recouped early losses to end higher on Tuesday after shares in China which plunged to their lowest level since 2009 rebounded following assurance from its central bank and gains in Europe also aided investor sentiment.
The Sensex gained 88 points to close at 18,629 and the Nifty advanced 19 points to end at 5,609.
However, the broader markets underperformed the benchmark indices and both the BSE Mid-cap and Small-cap indices ended 0.4% lower.
A late recovery in Chinese stocks and comments by top Federal Reserve officials that eased fears of a sooner-than-expected end to its stimulus lifted shares and bonds off their lows on Tuesday and cooled a rally in the dollar.
Shanghai shares slumped more than 6% in intra-day trade hitting their lowest since early 2009, briefly pulling Hong Kong into the red, with losses accelerating for mid-sized banks as mainland inter-bank rates started climbing again. However, the Shanghai Composite recovered after its central bank reassured that appropriate liquidity would be maintained to support growth. The benchmark index finally ended down 0.2%. The Hang Seng gained 0.2% while Straits Times ended up 0.5%.
Japan's Nikkei ended below 13,000 in volatile trade on Tuesday as worries about stresses in China's banking system added to concerns about the US Federal Reserve's plan to start reducing its monetary stimulus.
The Oil and Gas index was the top gainer among the sectoral indices on the BSE up 1.5% followed by Capital Goods, FMCG, Auto, Realty and Bankex among others.
In the oil space, Reliance Ind gained 1.3% while ONGC ended up 3.8% after its arm ONGC Videsh Ltd (OVL) and Oil India Ltd (OIL) have signed definitive agreements to acquire Videocon Industries' 10% stake in Mozambique gas field for $2.475 billion (Rs 14,900 crore).
Among other index heavyweights, ITC, L&T, Bharti Airtel, HDFC Bank and Mah & Mah ended up 1-4.3% each.
ICICI Bank, HDFC and SBI were among the top Sensex losers on profit taking in late trades.
Software exporters TCS, Wipro and Infosys ended down 0.1-1.9% each after the rupee appreciated marginally against the US dollar.
Among other shares, MMTC ended in 5% lower circuit at Rs 120 for the ninth consecutive day after the government fixed the floor price for stake sale at Rs 60/- per share which is a huge discount to the current market price.
Crompton Greaves gained 10% to end at Rs 82 after the company announced that its board will consider share buyback proposal on June 28.
Shares of the companies engaged in gems and jewellery business extended losses on Tuesday on rising worries that the Reserve Bank of India's and government initiative to curb gold imports may impact growth and earnings going forward. Gitanjali Gems was the top loser among jewellery stocks which ended in 20% lower circuit at Rs 324 for the second straight session.
Shares of Godrej Properties gained 5.6% to end at Rs 530, in an otherwise sluggish market, after the company announced an agreement with Shubh Properties for a re-development residential project in the eastern suburbs of Mumbai.
However, market breadth ended weak with 1,308 losers and 984 gainers on the BSE.
