Indian markets slipped on Thursday on heavy selling by foreign portfolio investors and high crude oil prices before recovering some ground later in the day as traders looked to the world markets for cues. At the interbank foreign exchange market, the rupee opened lower at 77.74 against the dollar and tumbled to an all-time low of 77.81. It finally settled at 77.74, down 6 paise over its previous close of 77.68.

In stocks, the Sensex broke its four-session losing run to close above the 55000-mark, powered by a rally in index heavyweight Reliance Industries.

Overcoming a lacklustre start, the 30-share Sensex surged 427.79 points or 0.78 per cent to close at 55320.28. The broader NSE Nifty advanced 121.85 points or 0.74 per cent to finish at 16478.10.

Bond yields also eased on Thursday, with the interest rate on the benchmark 10-year government paper falling to 7.494 per cent from 7.518 per cent on Wednesday on higher demand. Brent crude prices ruled above $120 per barrel at $123.74. West Texas Intermediate crude was also above $120 at $121.9 per barrel.

“The market continued to be dominated by a volatile global market with investors weighing the impact of the upcoming global central bank meetings. However, the domestic market reversed its losses during the closing hours due to positive movements in the US futures,” said Vinod Nair, head of research at Geojit Financial Services.

“FIIs are cautious ahead of the Fed policy even though the market may have factored-in an interest rate hike of 50 bps,” he said.

Ajit Mishra of Religare Broking said markets have been witnessing volatile swings in a broader range and most sectors are trading in tandem with the trend.

“We reiterate our cautious stance and recommend focusing more on sector/stock selection. Among sectors, auto and oil and gas look strong to us while metals may continue to trade subdued,” he said.

Foreign institutional investors remained net sellers in the capital market on Thursday as they offloaded shares worth Rs 1,512.64 crore, as per stock exchange data.

The rupee trade on Thursday was volatile because of swings in crude price.

Jateen Trivedi of LKP Securities, said, “Rupee traded in a range-bound session between 77.70-77.80 as the prices of crude traded volatile. Crude above $120 in WTI (West Texas intermediate) is now a concern for all the markets and nations, especially the ones that are net importers like India.”

“Crude prices above 125 will unsettle the broad markets and volatility will increase along with fund outflows from domestic markets. Hence, pressure on the rupee will increase if crude starts trading and settling above $125. Rupee can be seen in a range of 77.55-77.95 till then,” he noted.