MUMBAI: Diminishing hopes of an interest rate cut, coupled with caution over the third quarter results and thin volumes depressed the Indian equity markets during a volatile late-afternoon trade session on Thursday.
This led to a barometer index to trade in the red.
The bellwether indices' receded after making healthy gains as key macro-data showed an acceleration in inflation trends.
This diminished hopes of a rate cut by the country's apex bank and subdued investors' sentiments.
Caution over the third quarter (Q3) results season, long-liquidation positions and sliding Asian markets, too, dented sentiments.
Initially, both the bellwether indices opened deep in the red, following lower closing of the US markets on Wednesday and a further plunge in oil prices.
However, both indices pared their initial losses as healthy Q3 results, recovering European markets and short-covering restored investors' risk-taking appetite.
Value buying at lower levels, which was prompted by attractive prices, supported the markets' upward movement.
The barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) was lower by 72 points.
Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) was trading in the red. It was down by 27 points or 0.36 percent at 7,535.55 points.
The S&P BSE Sensex, which opened at 24,606.20 points, was trading at 24,782.61 points (3.00 p.m.), down 71.50 points or 0.29 percent from the previous day's close at 24,854.11 points.
The Sensex has so far touched a high of 25,018.46 points and a low of 24,473.22 points during the intra-day trade.
The S&P BSE market breadth favoured the bears -- with 1,902 declines and 741 advances.
"The general weakness still continues. Investors' are cautious over the Q3 results season, slowdown in domestic reforms and fears of a global markets meltdown," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.
"Our markets recovered after a weak opening on the back of short-covering, value buying at lower levels and recovering European markets. Even good Q3 results from an IT major boosted sentiments," James added.
Nitasha Shankar, vice president for research with YES Securities, elaborated that these intra-day pull back rallies were on thin volumes and that correction may resume once these rallies subside.
"Broader markets continue their underperformance as buying is seen in the large cap index weighted stocks," Shankar noted.
"PSU (public sector undertakings) banks, reality, auto and metal indices continue to bleed. The IT index is trading in the green," Shankar added.