Markets reversed early losses and ended higher as investors picked up beaten down frontline stocks.Nifty opened lower following weak global cues after Ben Bernanke said that the US economy was weak and interest rates would remain unchanged for an extended period.
The index touched a low of 5,252 in opening trades and quickly changed course on bargain buying in frontline shares such as Reliance Industries, Infosys and ITC.
The S&P CNX Nifty touched a high of 5,330 in afternoon session.
The Nifty ended near day's high, at 5,320, up 42 points and the Sensex closed at 17,728, up 177 points.
Indian markets also bucked the Asian peers which were under pressure on concerns of a slowdown in US economy after Federal Reserve's cautious outlook.
The Nikkei Stock Average slipped 0.3%, Hong Kong's Hang Seng was off 0.5% and South Korea's Kospi Composite also fell 0.4%. However China's Shanghai Composite bucked trend and ended up 1.5%.
While India outperformed Asian peers analysts said that Indian markets continued to trade at 40% premium to other emerging markets even at current levels.
Analysts expect the Sensex Price to Earnings multiple to decline further given the policy stalemate and rising inflation.
Raamdeo Agrawal, Managing Director from Motilal Oswal Financial Services said that there is a high probability that markets would fall further.
Agrawal said investors should closely watch Inflation, if it eases, markets would start rallying before interest
However on the macroeconomic front the food inflation for the week ended June 11 surged to 9.13%.
Among individual stocks Reliance Industries gained 2.9% to Rs 870 on bargain hunting and reports that after the company made another natural gas discovery in the very first well drilled on its deep-sea D-9 block of the hydrocarbon rich Krishna Godavari basin.
The heavyweigh contributed 55 points on the Sensex.
The shares of oil marketing companies were up after a senior Oil Ministry official said that the anticipated meeting of a panel of ministers to raise auto and cooking fuel prices may happen next month. Hindustan Petroleum Corp and Bharat Petroleum Corp were 0.2% each and Indian Oil Corp added 2.9%.
Among the sectoral pack, BSE Consumer Durables index was the top gainer, up 4.1%.
Titan Industries advanced 6.8%, Videocon Industries gained 4.9% and Rajesh Exports added 1.6%.
Buying interest was also seen in the FMCG index, up 2.2%. ITC advanced 3.4%, Hindustan Unilever gained 1.8% and Dabur India was up 1.5%.
BSE Healthcare index was the top loser, down 0.5%. IPCA Lab declined 2%, Cipla was off 1.9% and Aurobindo Pharma declined 1.7%.
Broader markets unperformed the Sensex, the midcap and the smallcap indices were down 0.3% and 0.6% each.
Top gainers on the Sensex were Reliance Communication and ITC up 3.4% each, and ICICI Bank added 1.1%. Only 6 components ended in red, Cipla fell 1.9%, Maruti was down 1.7% and BHEL declined 0.8%.
Market breadth was positive, 1159 stocks advanced for 1612 stocks which declined.
