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Markets have made a smart recovery and are trading near day’s high led by renewed buying among financials and capital goods shares.
By 1435, Sensex gained by 62 points at 19,631, and the Nifty up 30 points at 5,954 levels.
On the global front, The euro hit four-week high against a weaker dollar on Thursday and stocks edged down ahead of a European Central Bank meeting at which no change in rates is expected although economic forecasts may be tweaked.
The ECB cut its main interest rate to a record low 0.5% in May and is likely to sit tight as it waits for signs of the second-half economic recovery it has predicted.
Japan's Nikkei average ended below 13,000 for the first time in two months on Thursday in choppy trade, extending its decline from a 5-1/2 year high hit last month to the verge of bear-market territory.
Analysts said that the sour mood may persist for a while as the market is starting to price in fundamentals including corporate earnings after Prime Minister Shinzo Abe's reflationary policy and the central bank's aggressive monetary easing sparked the rally.
The Nikkei dropped 0.9% to 12,904.02, its lowest close since April 5. Trading was volatile with the index rising as high as 13,238.53 earlier.
India can achieve its fiscal deficit target of 4.8% in the current fiscal year ending in March 2014, finance minister P. Chidambaram said on Thursday.
Finance minister P Chidambaram today said the weakening of rupee in the recent past is not a cause for alarm as inflows continues to be strong and the currency is expected to stabilse going ahead.
The rupee today hit the 57-level in the late morning trade after 11 months on persistent dollar demand from importers and banks.
On the sectoral front, BSE Bankex, Realty and Capital Goods indices have gained by 1% each. However, BSE Healthcare index has declined by nearly 1%.
From the financial space, ICICI Bank, HDFC and SBI have gained between 1-2% on account of short covering and value buying.
Other notable gainers are L&T, Maruti Suzuki, Wipro, ITC, M&M and Cipla.
On the losing side, Bharti Airtel is the top Sensex loser, down nearly 2%. Other losers are Sun Pharma, NTPC, Tata Steel and GAIL.
RIL is marginally down as no major announcements were made in 39th AGM today.
The markets breadth in BSE remains marginally negative with 1,146 shares declining and 1,080 shares advancing.
