Mumbai, Aug 23: Market benchmark BSE Sensex pared early sharp losses on the back of a rebound in oil, IT and banking stocks amid reports that the government may roll back the surcharge on foreign portfolio investors.
The 30-share index was trading higher by 20.06 points or 0.05 percent at 36,492.99 points in the afternoon session as 20 of its constituents gained.
The broader NSE Nifty rose by 34.55 points or 0.32 percent to 10,775.90 with 36 of its scrips trading in the green.
Stocks had dived in the opening session with the benchmark indices declining up to 1 percent due to fading hopes of any stimulus package by the government to boost the sagging growth.
Media reports suggesting that the government may roll back the tax surcharge on foreign portfolio investors helped revive the equities. A rebound in Reliance Industries, SBI, Yes Bank, and IT stocks also aided the recovery.
IT stocks TCS, Infosys, and Tech Mahindra rose up to 1.28 percent after the rupee declined to eight-month lows.
Among major gainers, Yes Bank rose by 3.82 percent, Vedanta by 5.08 percent and Tata Steel by 3.64 percent.
Mahindra & Mahindra, Tata Motors and HeroMotoCorp rose up to 3 percent after the government said that it was not looking at any deadline to roll out electric vehicles.
Meanwhile, Asian markets were also trading in the green ahead of a key address by the US Federal Reserve Chairman.
European markets also opened higher with London's FTSE 100 and Frankfurt's Dax 30 gaining up to 0.5 percent in opening trade.