Key benchmark indices rebounded in late noon deals and ended in the green after the Finance Minister announced the deferment of General Anti-Avoidance Rule by one year.
The BSE Sensex ended at 16,913, up 82 points and the Nifty ended at 5,114, up 27 points.
During the day, the Sensex had touched a low of 16,514 and the Nifty had dropped below 5,000 to touch 4,990.
In Asia, Japan's Nikkei average slid nearly 3% to its lowest close in three months on Monday after elections in Europe stoked worries about efforts to resolve the euro zone debt crisis and US jobs data disappointed.
The index ended at 9,119, down 2.78%. The Hang Seng index shed 2.61% while the Shanghai Composite index ended unchanged at 2,452.
European markets are lower today as French and German shares fall. At 1545 hours, the French CAC 40 was off 0.79% while the German DAX was down 0.95%.
The FTSE 100 in London is not trading.
Back home, according to Hormuz Maloo, Technical Analyst, Geojit BNP Paribas Securities, "In the medium term there is some support for the Nifty around 4,900 levels.
In the slightly longer term, however, the market could go lower.
"We have already declined quite steeply, particularly in the last two days, so it may not be a good time to go short now.
"But I think that in some time we should be seeing lower levels."
On the sectoral front, BSE Capital Goods, Metal and Consumer Durables indices led the gains, up 2-4% each. BHEL, Larsen & Toubro, Havells India, up 4-6% each, were the prominent gainers from among the Capital Goods stocks.
BSE FMCG index was the top loser, having shed 1%.
Reliance Industries shed 1.53% at Rs 715 and was the
Other prominent losers included Hero MotoCorp, Hindustan Unilever, HDFC Bank and Wipro, down 1% each.
The gainers from the pack were BHEL, Larsen & Toubro, DLF, Jindal Steel and Maruti Suzuki, up 3-6% each.
Titan Industries moved higher by 4% at Rs 249, after the government removed the levy of 0.3% excise duty on unbranded jewellery, which will help in reducing the increasing price of the metal.
On branded jewellery, the Finance Minister Pranab Mukherjee said there will be no excise duty on purchase of jewellery valued at Rs 500,000 against earlier threshold of Rs 200,000.
Shares of airlines companies bounced back after the announcement by the Finance Minister regarding the GAAR. Kingfisher Airlines, Jet Airways and Spice-Jet ended higher by 7-12% each.
HDFC, a housing finance provider, posted a 17% rise in net profit at Rs 412 crore for the quarter ended March 2012.
It was Rs 353 crore (Rs 3.53 billion) in the same period a year ago.
The scrip ended at Rs 664, up 1%.
Jaiprakash Associates slipped 2.3% to Rs 69.4 in trades on reports that the Himachal Pradesh High Court's green bench imposed a penalty of Rs 100 crore (Rs 1 billion) for violating the law and fraudulently setting up a cement plant and a thermal power plant.
"A division bench of Justices Deepak Gupta and Sanjay Karol passed the landmark judgment May 4 ordering payment of Rs.100 crore as damages for having set up a cement plant by adopting fraudulent means and ordered the company to dismantle the 62 MW captive thermal plants within three months that is being constructed in the same premises" the report suggests.
The overall market breadth was positive as 1,440 stocks advanced against 1,270 declining ones, out of 2,846 stocks traded on the BSE.
