Overcoming the initial sharp fall in stocks in reaction to the CRR and repo rate hike by the Reserve Bank of India yesterday, the markets today managed to negate the impact of the RBI move in late deals.

However, the future course would depend upon the actual impact of the RBI measures on the rate of inflation. Friday should be a crucial day when fresh inflation numbers would be declared.

Market watchers said the RBI governor Dr YV Reddys meeting with the Prime Minister, Dr Manmohan Singh and finance minister Mr P Chidambaram was a sufficient hint that the central bank would come up with some drastic announcement. Dr Reddy did not disappoint although the simultaneous increases were totally unexpected.

The stiff dozes of 50 basis point hikes evoked panic selling reaction on the Dalal Street this morning. More so because Thursday will be the expiry date for Junes contracts. The 30-scrip Sensitive Index started 250.51 points down at 13,856.07 points and slipped further to a 13 month low of 13,731.54 points when a gradual recovery set in mainly on account of short-covering as investors bought shares at lower levels.

The benchmark index of the Bombay Stock Exchange closed at 14,220.07 points gaining 113.49 points or 0.80 per cent. The trend was more positive at the National Stock Exchange where the broader markets 50-stock S&P CNX Nifty ended 1.47 per cent up at 4,252.65 points gaining 61.55 points.

The highlight of todays business had been a spurt in total turnover consisting of BSE+NSE (cash) and F&O. It nearly reached Rs 100,000 crore with the F&O sector accounting for Rs 81,000 crore.

Analysts say tomorrow being the rollover day for future contracts the volatility in todays market was justified. Yesterday FIIs had bought equities worth Rs 275 crore But the foreigners have so far net sold $6 billion worth Indian equities.

The two additional factors that softened the impact of CRR and repo hikes were positive buying in European markets this afternoon and crude oil prices looking steady at around $137 per barrel.

The OPEC has blamed dearer crude on weak dollar and not on the markets demand and supply positions.