Short-covering, coupled with positive global indices and hopes of a status quo on US interest rates, marginally buoyed the Indian equity markets during the late-afternoon trade session on Wednesday.
This led a barometer index of the Indian equity markets to the positive territory.
The 30-scrip sensitive index (Sensex) of the S&P Bombay Stock Exchange (BSE) gained 53 points or 0.22 percent.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) was marginally in the positive zone. It inched up by 15 points or 0.20 percent to 7,450.80 points.
Initially, both the bellwether indices opened on a flat-to-positive note in sync with their Asian peers and firm closing of the domestic markets on Monday.
Moreover, short-coverings were supported by firm oil prices and expectations of healthy roll-over figures from the F&O (Futures and Options) expiry slated for Thursday.
Further, expectations that the US Fed will maintain status quo on interest rates during its upcoming rate-setting meeting, boosted investors' confidence.
The FOMC (Federal Open Market Committee) meet is scheduled for January 27-28.
However, caution over the rupee's weakness capped gains. The rupee value weakened to 68-level against a US dollar during intra-day trade.
The weakness in the rupee value indicates the massive outflow of foreign funds from the Indian equity and debt markets.
On Monday, the foreign institutional investors (FIIs) were net sellers. According to data with stock exchanges, FIIs divested Rs.91.15 crore.
"Rupee got off to a weak start today on the back of large short positions from arbitrageurs in domestic market in the front month contracts on the exchange," Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities, told IANS.
The S&P BSE Sensex, which opened on Wednesday at 24,643.13 points, was trading at 24,4538.87 points (at 2.55 p.m.) -- up 52.92 points or 0.22 percent from the previous day's close at 24,485.95 points.
The Sensex touched a high of 24,645.70 points and a low of 24,460.92 points during the intra-day trade.
The S&P BSE market breadth favoured the bulls -- with 1,380 advances and only 1,094 declines.
"Short-covering and firm closing for the last four consecutive session and positive Asian markets except those of China supported gains," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.
"There is an expectation that the US Fed might not raise interest rate's at its policy meet, given the financial turmoil in the global market. This boosted sentiments."
Nitasha Shankar, vice president for research with YES Securities, cited that volumes continue to remain low ahead of the F&O expiry portending to choppy trading sessions going ahead.
"Broader markets are outperforming the headline indices as stock specific buying continue," Shankar noted.
"Banking index extends its gain led by short covering in the PSU (public sector undertaking) banks. All major sectoral indices are trading higher with decent gains."
