The BSE Sensex and the broader Nifty were nearly unchanged in early trade on Tuesday, but traders are optimistic about a rebound after sharp selling through the last month.
The Sensex traded 5 points or 0.02 per cent lower at 18,861, while the Nifty slipped 4 points t0 5,699 as of 09.42 a.m. The rupee slipped against the dollar at 54.34.
Weaker economy remains a drag on indexes that just last week had hit their lowest since late November 2012, but technical analysts make a case for short term bounce.
The Nifty has edged above its strong support of 200 day exponential moving average, Sarvendra Srivastava said. The broader indices are also pulling back so 5,750-5,780 levels are likely on the Nifty, he added.
The trend has reversed, Somil Mehta of Sharekhan said, adding that a sharp bounce to 5,900 is expected in the short term.
Sajiv Dhawan of of JV Capital Services, however, said there is no real conviction in markets with the sort of bad macroeconomic data that comes on a day-to-day basis.
Fourth quarter corporate earnings will set the tone for markets, Mr Dhawan added.
The broader markets outperformed the benchmark indices for a second straight day.
Auto stocks declined after most firms reported lower than expected sales in March. Bajaj Auto was the top Nifty loser, down 1.5 per cent, while Maruti traded 1.3 per cent lower. Tata Motors declined 1.2 per cent.
28 stocks traded higher on the Nifty led by drug maker Lupin. Cairn India extended gains for a second straight session.
Asian shares inched higher and the dollar was pressured with investors growing cautious ahead of new indicators that could flag slowing U.S. economic momentum. U.S. stocks fell as trading resumed on Monday after an early close on Thursday, when the Standard & Poor's 500 Index touched a record high before markets closed for the Good Friday holiday.
(With inputs from Reuters)