The domestic market ended the losing streak of the last six consecutive sessions as investors picked stocks available at cheaper valuations after the recent correction.
However, the worries are not over yet and analysts anticipate the volatile trade to continue at least for the next couple of weeks.
Sensex jumped 635 points in intraday trade but pared most gains to end 180 points, or 0.34 percent, higher at 52,973.84 with 18 stocks in the green and 12 stocks in the red.
NTPC, Bajaj Finance, SBI, Maruti Suzuki, HDFC and Kotak Mahindra Bank ended as the top gainers while UltraTech Cement, Asian Paints, ITC, Tech Mahindra, TCS and Dr Reddy's Labs ended as the top laggards in the index.
"The broader markets witnessed keen interest in companies likely to post good numbers during the first quarter of the current fiscal. Diagnostic and pathology firms witnessed profit taking ahead of their Q4 earnings on the back of high competitive intensity," said S Ranganathan, Head of Research at LKP securities.
Mid and smallcaps outperformed strongly as the BSE Midcap and Smallcap indices closed 1.51 percent and 1.15 percent higher, respectively.
Among the sectors, BSE Telecom, Realty, Auto, Power and Utilities indices climbed more than 2 percent each.
"The recent spate of negative news has prompted investors to cut equity exposure. At one point, benchmark indices were going great guns, but profit taking once again saw the markets pare most of their early gains to end marginally higher. There are concerns that rising interest rates to quell higher inflation could hurt growth and may result in further correction," said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.
Crude oil prices eased slightly but Brent Crude remained above the $110 a barrel mark. The rupee ended 38 paise lower at 77.83 per dollar.
"Continued selling by FIIs as they chase high yield US bonds restricts the Indian market to hold on to its pull-back rally, despite interest from the domestic investors. Weakness in global equities along with the unfavourable global cues led to heavy selling towards the closing hours, as the investors lacked the confidence to take forward their positions. The investors are currently on a risk deleveraging phase, hunting for safe-haven investments," said Vinod Nair, Head of Research at Geojit Financial Services.
Chouhan highlighted Nifty moved within a range of 15,765-15,950 and the texture of the chart suggests a strong possibility of the continuation of a range-bound activity in the near future. For the bulls, 15,950/53,300 would be the immediate resistance level and above the same, we could see a sharp intraday pullback rally till 16,000-16,100.
On the other hand, 15,750 could be the immediate support level, and below the same chances of hitting 15,700-15,600 would turn bright, said Chouhan.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies and not of MintGenie.