The benchmark S&P BSE Sensex today rose 39 points, settling in positive terrain for the third straight session, after erasing most of its early gains as the Indian rupee once again weakened past the 64-mark against the US dollar.
In the domestic market, 19 Sensex shares finished higher, led by Bharat Heavy Electricals Ltd (BHEL) (6.63 pc), Sterlite Industries (2.79 pc), Wipro (2.52 pc), NTPC (2.52 pc) and Hero MotoCorp (2.35 pc). Oil & Natural Gas Corp (ONGC) fell 3.16 pc, followed by GAIL 3.02 pc and ICICI Bank 2.58 pc.
Brokers said trading sentiment was initially firm after the Finance Ministry indicated that steps to attract capital flows to fund the current account deficit can be expected within a week. The announcement followed Finance Minister P Chidambaram's meetings with overseas investors and top bankers in Mumbai on Saturday.
BSE Sensex opened higher and climbed to 18,728.19, a rise or 208.75 points. Later, selling in banking, refinery and PSU stocks pulled it down to settle at 18,558.13, a gain of 38.69 points or 0.21 per cent. The closing level was the highest since August 16, when it was at 18,598.18.
The wider CNX Nifty on the National Stock Exchange edged up 4.75 points, or 0.09 per cent, to 5,476.50. The SX40 index on the MCX-SX closed 60.45 points up at 11,021.18.
The fall of the Indian rupee below the 64-mark to near 64.50 per dollar also weighed on sentiment in the stock market.
"Some short covering along with cautious buying at lower levels aided market recovery," said Nidhi Saraswat, senior research analyst at Bonanza Portfolio Ltd. "However, market remains wary about the present situation of Indian rupee as well as economic condition of the country."
Power, capital goods, IT and pharma shares attracted buying interest.
Heavy electrical equipment major Bharat Heavy Electricals Ltd (BHEL) was the top gainer in the Sensex pack for the second straight day and closed up 6.63 per cent, adding to Friday's 8.1 per cent gain.
The market may remain volatile ahead of the expiry of futures & options August contracts on Thursday.
Asian stocks were mixed after a slump in US home sales eased speculation the Federal Reserve will reduce its economic stimulus next month. Key indices