Besides stock-specific developments, market participants were also enthused by Finance Minister P Chidambaram's comments in Singapore to widen the tax base and ramp up revenues, brokers said.

The Sensex, which had lost 120 points in the previous session, bounced back by 45.04 points, or 0.23 per cent to close at 20,026.61 points.

After a better start, the 30-share index touched day's high of 20,058.07 and a low of 19,920.91 as investors adjusted their portfolios after recent gains and ahead of RBI meeting.

Bharti Airtel closed 4.4 per cent up as it has hiked rates of special tariff vouchers and reduced free minutes usage, barely a month after hiking price of 2G data plans.

Stocks of banking, IT and capital goods sectors attracted buying on steady inflow of better corporate earnings.

However, HUL shares tanked by 4.4 per cent after reporting quarterly numbers and announcing hike in royalty payment to parent Unilever yesterday.

"Markets opened on a flat note and continued to show weakness in first half of the trading session as profit booking was seen at higher levels," said Nidhi Sarswat, Senior Research Analyst, Bonanza Portfolio Ltd.

The broad-based National Stock Exchange index Nifty rose by 5.80 points, or 0.10 per cent to 6,054.30.

In the banking sector index, State Bank of India, HDFC Bank, HDFC Ltd and ICICI Bank gained. In the capital goods sector, L&T, BHEL and Siemens and ABB registered gains.

Outside the indices, HDIL tumbled by 14.33 per cent on reports of a top official selling big chunk of shares.

Globally, Asian markets were mostly ended lower after disappointment over the Bank of Japan's latest moves which lifted the yen.

Indices in Hong Kong, South Korea and Taiwan eased up to 0.81 per cent while indices in China and Singapore inched up by 0.25 per cent to 0.35 per cent respectively. Japan's Nikkei tanked 2.08 per cent.

European stocks were trading narrowly mixed as indices in Germany and UK moved up by 0.18 per cent to 0.23 per cent while France (CAC) was quoting lower by 0.11 per cent.

Turning to the local market, 16 scrips out of the Sensex pack ended higher while 14 others finished lower.

Major gainers from the Sensex were Bharti Airtel (4.44 pc), Tata Power (2.38 pc) ITC (1.37 pc), Hero Motoco (1.02 pc) HDFC (0.92 pc) and ICICI Bank (0.85 pc).

However, HUL dropped by 4.43 per cent, followed by Tata Motors (1.98 pc), Hindalco Ind (1.54 pc), Gail India (1.32 pc), Bajaj Auto (1.24 pc), ONGC (1.14 pc) and NTPC (1.07 pc).

Kishor P Ostwal, CMD, CNI Research Ltd. said,"Second-line stock prices were down 5-10 per cent triggering major stop losses except Sensex and Nifty stocks. Support for NSE Nifty lies at 6000 resistance at 6110."

Among the sectoral indices, the BSE-Teck inched up by 0.64 per cent, followed by Bankex (0.43 pc). BSE-Realty dropped by 2.34 per cent, followed by the BSE-PSU (1.00 pc), the BSE-CD (0.94 pc), the BSE-Auto (0.83 pc) and the BSE-Metal (0.54 pc).

In a lacklustre but volatile trade today, second-line stocks suffered the most and as a result, their indices BSE-Midcap and BSE- Smallcap underperformed Sensex with a fall of 0.91 per cent and 0.90 per cent respectively.

The total market breadth continued to remain negative as 1,411 stocks finished lower while 817 ended higher. The total turnover improved further to Rs 2,469.04 crore from Rs 2,435.10 crore yesterday.