Shares ended little changed on Tuesday, after four straight sessions of gains, with banking and energy stocks advancing to counter losses in information technology.
Nifty was up 0.03% at 17,345.45, at close and Sensex rose 0.04% to 58,136.36.
Both indices were down as much as 0.6% earlier in the day but saw a recovery in the final hours of the session on positive cues from the rupee, which strengthened to 78.49 per dollar, its highest level since June 28.
"One of the main factors for a rebound is the rupee upmove. A 40 paisa appreciation in a day doesn't happen very often so even though the global markets are down, the rupee has really helped the market," said Samrat Dasgupta, chief executive officer at Esquire Capital Investment Advisors.
Global stocks slipped on Tuesday, weighed by fears of a global recession and on concerns that a visit by US House of Representatives Speaker Nancy Pelosi to Taiwan would further harm relations between China and the United States.
Looking ahead, traders will turn focus to the Reserve Bank of India's (RBI) monetary policy decision on interest rates on Friday.
With inflation at multi-year highs, the RBI's monetary policy committee is seen raising rates, though the views on the quantum of increase were split wide between 25 basis points and 50 basis points, a Reuters poll of economists showed.
In domestic trading, the Nifty's PSU and Nifty Energy closed 2.68% and 1.09% higher, respectively, while the IT index fell 0.67%.
Among individual stock moves, GAIL closed 3.9% lower. Reuters had earlier reported that the country's largest gas distributor started rationing and cutting supplies to clients after imports from a former unit of Russian energy giant Gazprom got hit by sanctions.
