The market pulled off a startling recovery Tuesday regaining most all of its loss as a rally in oil & gas major Reliance Industries saved the day. A recovery in some European markets also lifted sentiment. Even though key indices ended in the red, the close was not as ugly as expected, analysts said.

Bombay Stock Exchange's Sensex closed at 15,962.56, down 100.62 points or 0.63 per cent. From an intra-day low of 15,709.51, the 30-share index rose to a high of 15,985.40. National Stock Exchange's Nifty closed at 4715.90, down 23.70 points or 0.50 per cent. It rose to an intra-day high of 4739.30 from a low of 4634.

"Earlier in the day, short positions were being created that were covered later, which aided the rebound. It is very difficult to conclude a trend for a market that is bogged down by inflation fears, worries of a fuel price hike and political uncertainty. The market continues to be on a downward bias. The street is now keenly awaiting the government's decision on fuel prices. The reaction will depend on the extent of the fuel price hike," said Hitesh Agarwal, head of reseach at Angel Broking.

External Affairs Minister Pranab Mukherjee today said a Cabinet meeting will be held on Wednesday to decide on increasing the prices of fuel, after 10 days of political tussle over the proposal.

Petroleum Minister Murli Deora, who has been pushing for a Rs 10 a litre hike in petrol, Rs 5 per litre increase in diesel and Rs 50 per cylinder raise in LPG prices, has readied a note for consideration of the Cabinet.

However, the hike may be moderated to Rs 3, Rs 5 or Rs 7 a litre on petrol and Rs 2, Rs 3 or Rs 4 a litre on diesel. LPG prices may be raised by Rs 20 per 14.2-kg cylinder, according to reports.

Secondline stocks were hit hard. BSE Midcap Index closed 0.56 per cent lower at 6547.30 and BSE Smallcap Index declined 0.97 per cent to end at 7882.29.

ACC (up 3.74%), Ranbaxy Laboratories (3.09%), DLF (2.61%), Wipro (2.57%), Cipla (1.61%) and Reliance Industries (2.17%) chiefly contributed to the recovery on the 30-share index.

Losers comprised Bharti Airtel (down 4.14%), Reliance Infrastructure (3.87%), Satyam Computer (3.64%), BHEL (2.95%), HDFC (2.84%), Jaiprakash Associates (2.57%) and Larsen & Toubro (2.30%).

Market breadth was poor with 1,818 declines against 847 advances on BSE.

Meanwhile, European economic growth accelerated more than initially estimated in the first quarter as investment and construction spending in Germany helped the region weather record oil prices and market turmoil. The FTSE 100 was up 0.21 per cent, CAC 40 rose 0.25 per cent while DAX 30 lost 0.27 per cent.

On the other hand, Asian markets sulked on fresh concerns on widening credit losses and slow global economic growth. The Nikkei fell 1.5 per cent, Hang Seng tumbled 1.83 per cent and Straits Times shed 1.07 per cent.