Short covering and positive global cues helped the BSE Sensex snap six-day losing streak and the Nifty close above 8000 level on Tuesday after volatility. The broader markets outperformed benchmarks with the BSE Midcap and Smallcap indices rising more than 1.1 percent. Commodities also bounced back after fall in dollar.The 30-share BSE Sensex was up 195.64 points at 25960.78 and the 50-share NSE Nifty climbed 73.20 points to 8002.30. The market breadth also turned positive as about 1475 shares advanced against 1083 declining shares on the BSE.

Investors continued to avoid pumping in fresh money into markets due to demonetisation concerns and strengthening dollar. They maintained cautious stance ahead of Federal Reserve’s policy meeting in next month.

“Traders would be expecting more short covering by FIIs who had built up heavily on the short side since the US elections,” Anand James of Geojit BNP Paribas Financial Services said. FIIs net sold more than Rs 16,000 crore worth of shares (till November 21) since October.

Given the near term uncertainty on how liquidity will flow into the system, Anish Damania of IDFC cut Nifty target tactically to 8100.

Damania said demonetisation is expected to be positive for inflation, bond yields and rupee, but it would have a negative impact on GDP and money supply.

All sectoral indices ended higher. Nifty Auto, FMCG, Metal and Realty indices rallied 1-3 percent on short covering.

HDFC, Maruti Suzuki, Reliance Industries, HUL, Bajaj Auto, Hero Motocorp, Wipro, Bharti Airtel and Tata Steel gained 1-3 percent.

Engineering and construction major Larsen & Toubro was down 1.4 percent ahead of quarterly earnings due later today. State-run power equipment maker plunged more than 3 percent.

Torrent Pharma surged 2 percent on getting approval from the USFDA for Darifenacin hydrobromide tablets that are used to treat overactive bladders. Aurobindo Pharma gained 1 percent as it received tentative approval from the USFDA for Lurasidone hydrochloride tablets that are used to treat schizophrenia & bipolar disorders.

On the global front, European stocks were trading higher following a positive lead from Wall Street. France’s CAC, Germany’s DAX and Britain’s FTSE were up 0.5-0.9 percent, at the time of writing this article. Asia also ended higher with China’s Shanghai and Hong Kong’s Hang Seng rising 1 percent each. Japan’s Nikkei was up 0.3 percent after damage from an earthquake appeared moderate.

Brent crude prices increased 0.74 percent to USD 49.26 a barrel on hopes of OPEC output deal while gold gained half a percent.