The markets closed higher for the second consecutive day with the Sensex continuing its northward journey and closing the day up 105 points at 18,605 while the Nifty gained 31 points to end at 5,592.
However the broader markets surged ahead where both the smallcap and the midcap indices gained 0.8% each as compared to the Sensex which added 0.5 per cent.
Earlier in the day, the key benchmark indices, Sensex and the Nifty hit 2-1/2-week highs in early trade touching a high of 18,636 helped mostly by the higher Asian stocks.
However a bout of volatility was witnessed in mid-morning trade where the Sensex slumped to touch an intra-day low of 18,514, down 122 points from the high.
Meanwhile, the increasing strength in index heavyweight, Reliance Industries and resilient Asian stocks and gains in US index futures helped the Indian stocks to retrace and scale higher through the day.
A K Prabhakar, senior vice president Equity Research, Anand Rathi says, "The bounce witnessed in the last four five days can be considered as 'technical bounce' till 5750. The 200DMA of Nifty is 5750 which is important for any fresh rally."
Aviation stocks were in the spotlight on Wednesday as all the aviation scrips reacted on reports that state-run oil marketing companies have cut jet fuel prices by about 4%,
Jet fuel accounts for about 40% of the operating cost for airline companies.
At the close, Jet Airways, Kingfisher Airlines and Spice Jet gained in the range of 1-1.5%.
The auto sales data for the month of May which was out on Wednesday reflected the effects of the increase in lending rates coupled with the rise in fuel prices.
Country's largest car-maker, Maruti Suzuki India reported a marginal 1.9% increase in total sales, its slowest growth rate in more than two years while Tata Motors registered a 10% rise in total sales in May as compared to the same month last year.
Two-wheeler maker TVS Motor saw an increase of 18% and Suzuki Motorcycle India Pvt Ltd reported 39% growth in sales in May, 2011 in the same month last year.
Vehicle sales in India, one of the fastest-growing auto markets in the world, grew a record 30% in 2010 which is expected to halve to 12 to 15% this year.
