In volatile trade, the BSE benchmark Sensex today recovered from its biggest fall in 14 months to close 31 points higher at 19,722.29 on buying in banking and healthcare stocks, amid inflation easing to over 3-year low.
After a better start, the 30-share Sensex fell to the day's low of 19,652.69 as investors adopted a cautious before Wholesale Price Index (WPI) based inflation data release.
After data showed WPI inflation in April 2013 posted its first sub-5 per cent reading since November 2009, rate cut hopes led buying in ONGC, HDFC, Sun Pharma, Bharti Airtel, and Tata Motors which supported the recovery, traders said.
The Sensex finally ended with a gain of 30.62 points, or 0.16 per cent, at 19,722.29. Yesterday, it had plunged by over 430 points due to various factors including surging trade gap.
The stock market today also improved on speculators covering their pending short positions created in the previous session's steep fall, brokers said.
"We believe today's WPI inflation report provides ample room for the RBI to cut policy rates at its 17 June policy meeting," said Barclays analysts Rahul Bajoria and Siddhartha Sanyal in a research note.
In line with the general firming trend, the broad-based National Stock Exchange index Nifty rose by 14.95 points, or 0.25 per cent, to 5,995.40. The MCX-SX flagship index SX40 closed 17.20 points up, or 0.15 per cent, to 11,679.54 points.
Globally, Asia closed narrowly mixed. Key indices in China, Hong Kong and Japan settled lower while Singapore, South Korea and Taiwan ended higher. European indices were also trading lower in early trade.
