Shares edged up on Tuesday after a lower start, as inflation data soothed investors' nerves, while global markets were spooked by Wall Street hitting a bear market milestone on fears of a looming recession.
The Nifty was up 0.2% at around 15,810 in early trade, while Sensex rose 0.2% to around 52,955.
"CPI data was comfortable and that is why there has been some bounceback. Volatility is likely to remain for a month or two," said Siddharth Sedani, senior vice president at Anand Rathi.
India's retail inflation eased to 7.04% in May, after touching an eight-year high of 7.79% in April, but remained above the central bank's tolerance band for a fifth month in a row, suggesting it would continue with rate hikes in August.
Asian shares slid sharply on Tuesday after Wall Street hit a confirmed bear market milestone and Treasury yields struck their highest in more than a decade on fears aggressive interest rate hikes would push the world's largest economy into recession.
Nifty IT was up 0.9%, after having fallen 11.6% so far this month.
Infosys was the top boost on the Nifty 50 index, up 1.3%.
The Nifty Metal was up 0.7%, with Ratnamani Metals and Tubes the top gainer at 2.4%.