The Sensex opened on a flat note in trades on Tuesday after Monday's sell off owing to weakness in frontline banking, oil & gas and technology stocks.
The 50-share Nifty was hovering around its important psychological level of 8,750 led by selling in GAIL India, HDFC, Wipro, Infosys and Axis Bank.
Meanwhile, most of the Asian markets were trading lower with Nikkei outperforming the other Asian peers.
The U.S. dollar neared multi-year highs on the yen and euro in Asia on Tuesday amid starkly diverging outlooks for interest rates globally, while markets looked past a surprisingly high reading on Chinese inflation.
The dollar climbed to a three-month high at 121.71 yen and came within a whisker of the December peak at 121.84. A break would take it to territory not visited since July 2007.
A lower yen is generally viewed as positive for Japan's exports and corporate profits, and the Nikkei added 0.5 per cent.
Overnight, the U.S. stocks rose on Monday on the back of billion-dollar M&A deals, while U.S. and euro zone bond prices rose as the European Central Bank started its bond-buying programme.
The Dow Jones industrial average rose 138.94 points, or 0.78 per cent, to 17,995.72, the S&P 500 gained 8.17 points, or 0.39 per cent, to 2,079.43 and the Nasdaq Composite added 15.07 points, or 0.31 per cent, to 4,942.44.
Back home, the broader markets were outperforming the benchmark indices. The BSE mid-cap and small-cap indices were up 0.6 per cent each.
Cipla, Bharti Airtel, Jindal Steel and Power, Coal India, Lupin and BHEL were the top gainers on the Nifty up 1-2.7 per cent each.
On the other hand, GAIL India, HDFC, HCL Technologies, Axis Bank, Wipro, Power Grid and Hindustan Unilever were down 0.8-2 per cent each.
At 9:30 AM, the Sensex was up 15 points at 28,859 and the Nifty advanced 2 points to 8,759.
(With inputs from Reuters)
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