It was a lacklustre day for the markets, after Monday's sharp rally. Both the equity benchmarks witnessed volatility throughout the session. However, the broader indices outperformed the benchmark indices on the back of huge buying in sugar stocks.
 
Buying was seen in capital goods, realty, metal, private power companies' shares and in individual stocks like ICICI Bank, Reliance Communication, Wipro, Tata Motors and Ranbaxy Labs. However, oil & gas, FMCG, select financials and technology stocks remained under pressure.

The 30-share BSE Sensex swung 212 points between an intraday high of 12,197.88 and low of 11,985.88, before closing the session at 12,131.08, down just 3.67 points or 0.03%. However, the 50-share NSE Nifty was up 0.22% or 7.9 points, to settle at 3,661.90, after witnessing swing of 63.45 points between a day's high/low of 3682.20 and 3618.75, respectively.

Broader indices - the BSE Midcap Index was up 1.85% or 67.58 points, to 3,718.87 and the Smallcap Index rose 1.98% or 80.88 points, to 4,162.58.

Rahul Mohindar of viratechindia.com said, "The backdrop of the Nifty still looks bullish and I continue to maintain that we probably are going to first see levels like 3,720 before we back off for any kind of major pullback. The levels to keep in mind from a short-term perspective would be – if 3,600 breaks maybe we would go down, fill up that gap area around 3,500 but again I don't see something more serious than that happening on a pessimistic side."

The 3,600 puts added about 5 lakh shares and at the higher level, the 3,700 calls added about 4 lakh shares.

Karun Mutha, Vice President, Risk & Arbitrage Trades at IL&FS Investsmart said, "We have seen some huge short covering happening on the markets and lot of new fresh positions on puts of 3,600 being build up, so that would act as an immediate support for the market. On the higher side there have been spreads going on between the Nifty calls strikes of 3,600 and 3,800 so investors are buying 3,600 calls and selling 3,800 calls wherein they are expecting the new range to be probably 3,600-3,800. So there is a lot of momentum in some of the midcap single stock futures and the rally continues to be looking good."

Sugar was leader in the midcap and smallcap packs; huge short covering was seen in these stocks. Bajaj Hindusthan shot up 23.86% and Triveni Engg surged 18.02%. Among other stocks, Balrampur Chini, Dhampur Sugar, Dwarikesh Sugar, Oudh Sugar Mill, Rajshree Sugars, Sakthi Sugars and Shree Renuka gained 5-9%.

In the midcap space, Emami, Jubilant, Godrej Industries, HCC and JSW Steel were up 10-14%. In the smallcap segment, Graphite India, Geodesic, Time Techno, DCM Shriram, Genus Power and ABG Shipyard gained 12-20%.

Sectoral indices
The BSE Realty Index outperformed other indices, surged 192.90 points or 8.63%, to 2,428.99. DLF and Unitech were up 10.7-11.4%. HDIL and Indiabulls Real gained 5-9%.

Metal stocks also witnessed buying interest followed by capital goods and select power stocks. The BSE Metal index was up 3.5% or 262.21 points, to settle at 7,751.68. JSW Steel, Jindal Saw and Tata Steel went up 9-10%. NALCO, Hindalco, SAIL, JSL and Sterlite were up 0.4-1.9%.

L&T, Punj Lloyd and BHEL were up 1.4-2.8% in the capital goods space. Respective Index went up 1.77% or 147.87 points, to 8,522.04.

Stocks like Suzlon Energy, Reliance Power, Reliance Infrastructure, GMR Infra, Power Grid Corp and CESC gained 2-10%, which helped the Power Index to close 1.19% or 25.91 points higher at 2,208.50. However, NTPC slipped 1.47% and Tata Power was down 0.33%.

In the banking space, ICICI Bank surged 7.64% and Axis Bank gained 3.11%. IndusInd Bank was up 6.36% post Q4 numbers. The BSE Bankex rose 2.36% or 144.63 points, to 6,278.16. However, SBI fell 1.65% and HDFC Bank declined 0.47%.

Healthcare and Auto indices closed 6.88 points and 5.93 points higher at 3,120.57 and 3,665.66, respectively.

However, FMCG Index fell 2.15% or 47.51 points, to 2,161.23, as ITC tumbled 3.94%. Britannia, GSK Consumer and HUL were down 0.8-2%.

Select technology stocks were under pressure; Infosys and TCS slipped 2.5-2.8%. The BSE IT Index declined 60.92 points or 2.11%, to 2,826.12. However, Wipro was up 1.04%.

The BSE Oil & Gas Index slipped just 0.38% or 32.43 points, to settle at 8,415.05, as HPCL, BPCL and IOC lost 1.3-3%. Reliance Petroleum, Reliance Industries and ONGC fell 0.44-0.6%.

Advances outnumbered declines; about 1,819 shares advanced while 1,156 shares declined. Nearly 135 shares remained unchanged.    

Volumes picked up in today's trade compared to previous session; total traded turnover was at 76,986.88 crore. This included Rs 18,459.49 crore from NSE cash segment, Rs 52,712.16 crore from NSE F&O and the balance Rs 5,815.23 crore from BSE cash segment.

Global cues
At the time of closing of Indian equities, European markets were trading higher. The FTSE (was shut on Monday) was up 122 points, to 4,365. The CAC was trading at 3,249, up 11 points and the DAX rose 8 points, to 4,910.

Among the US futures, the Dow Jones Futures went up just 1 point, to 8,360 and the Nasdaq Futures rose 4.25 points, to 1,426.75.

Asian markets ended higher. Straits Times gained 2.25% and Taiwan Weighted was up 0.78%. Shanghai and Hang Seng gained just 0.3% each. Nikkei and Kospi markets were shut today.