Mumbai: The Sensex scaled higher on Tuesday, only to surrender much of the gains as the benchmark closed the day with a paltry gain, let down by investors who booked profit towards the fag end of the session.
Global cues remained positive.
"The market turned volatile towards close because caution is prevailing ahead of US Fed policy outcome tomorrow, where the consensus showed 25 bps rate hike," said Vinod Nair, Head of Research, Geojit Financial Services Ltd.
The Sensex started lower, but quickly rebounded to hit the day's high of 31,260.77 after data showed retail inflation is on the way down, opening up space for RBI to lower rates.
However, it closed with a marginal rise of 7.79 points, or 0.03 percent, at 31.103.49. It had lost 166.36 points in the previous session.
The NSE Nifty ended down 9.50 points, or 0.10 percent, at 9,606.90.
Retail inflation fell to a record low of 2.18 percent in May, the lowest since 2012, from 2.99 percent in April, which raised hopes of a rate cut by the Reserve Bank at its next policy review in August.
Industrial output growth, however, grew at a slower rate of 3.1 percent in April.
The rupee offered some relief, ending higher by 11 paise at 64.33 against the dollar.
Globally, most Asian shares closed with gains. Key European indices traded firm.
PowerGrid, Lupin, HDFC, NTPC, Adani Ports were the bright spots.
The BSE power index jumped the most. Realty, consumer durables, FMCG and capital goods advanced too. The broader markets were no exception.
Meanwhile, foreign funds dumped shares net Rs 169.25 crore while domestic investors sold Rs 63.11 crore yesterday, as per the provisional figures.