The market succumbed to heavy profit-booking on the first two trading sessions on higher inflation (both WPI and CPI) as also contraction in factory output which renewed macro economic concerns.
However, healthy Q4 corporate earnings by some IT companies and optimism over a stable Government after the ongoing elections triggered heavy buying towards the tail-end.
The market, which had just three trading sessions, was closed on April 14 for Ambedkar Jayanti and on April 18 for Good Friday.
India's Index of Industrial Production (IIP) contracted by 1.9 per cent in February 2014 from 0.8 per cent growth in previous month.
The inflation, based on Wholesale Price Index (WPI), rose to 5.7 per cent in March from 4.68 per cent in February, while March inflation, based on Consumer Price Index (CPI) shot up to a three-month high of 8.31 per cent from 8.03 per cent in February.
The rise in inflation diminished hopes of rate cut by the Reserve Bank in its next monetary policy meet and adversely affected the market initially.
Brokers said a private weather forecast of below normal monsoon this year too had a negative impact on the market.
The markets also took note of global rating agency Standard & Poor's report, which stated that it may upgrade India's outlook if the next Government addresses some of the country's fiscal and economic challenges on a priority basis.
The BSE Sensex resumed higher at 22,698.09 and hovered in a range of 22,737.31 and 22,247.39 before closing at 22,628.84, a mere loss of 0.12 points over the last weekend level.
The NSE benchmark Nifty opened up at 6,792.70 and traded between a high of 6,813.40 and a low of 6,665.15 before ending at 6,779.40, a marginal gain of 3.10, or 0.05 per cent.
Brokers said hectic short-covering ahead of expiry of April contract of futures and options next week boosted buying. Investors were taking fresh positions in blue-chip shares available at attractive levels before a long week-end.
Foreign institutional investors (FIIs), who were net sellers for the first two days, again turned buyers as they infused Rs 278.30 crore during the shortened week (including provisional data of April 17), as per SEBI data.
"Markets continue to be driven by expectations of a favourable election outcome. Early implementation of important domestic reforms is needed for markets to sustain and move up from current levels," said Dipen Shah of Kotak Securities.
Jignesh Chaudhary, Head of Research, Veracity Broking Services said, "The Nifty and Sensex initially encountered correction, but bounced back later. The markets were expected to take major cues from the Q4 results of Reliance Industries (declared on Friday). Lower-than-expected numbers might affect the markets next week."
"The economic calendar in the coming week will see some important data related to US economy. These related to home sales and core durable goods order.
"Technical indicators are suggesting a bullish trend in the coming days for Indian markets. The Nifty is expected to trade in the range of 6,700-6,800 and Sensex between 22,600 and 23,800 levels," Chaudhary added.
Shares of Realty, Consumer Durable, Capital Goods, Metal and Power declined on selling pressure while FMCG, IT, Oil & Gas and Auto firmed up on good buying enquiries.
Fifteen scrips out of the sensex pack ended lower while 15 others finished higher.
Major losers from the sensex pack were HDFC (3.99 pct), Tata Power (2.96 pct), HDFC Bank (2.62 pct), BHEL (2.16 pct), Axis Bank (2.06 pct), Larsen (2.00 pct), SSLT (1.68 pct), Infosys (1.42 pct), NTPC (1.20 pct) and Coal India (1.01 pct).
However, Wipro rose by 3.10 pct followed by TCS 2.48 pct, ITC 2.72 pct, Icici Bank 2.14 pctm. Tata Motors 1.28 pct and SBI 1.18 pct.
Among the S&P BSE sectoral indices, Realty dropped by 4.14 pct followed by CD 1.62 pct, CG 1.07 pct, Metal 0.83 pct and Power 0.81 pct while FMCG rose by 2.20 pct, IT 0.82 pct, Oil& Gas 0.68 pct, Auto 0.63 pct and Teck 0.44 pct.
The total market turnover at BSE and NSE dropped further to Rs 8,498.88 crore and Rs 42,869.67 crore respectively during the truncated week from last weekend's level of Rs 10,374.36 crore and 66,228.39 crore.