After Wednesday's tumble, stock markets on Thursday wiped out most of Wednesday's losses intra-day with investor sentiment reconciling to the Greek crisis.
In contrast to the panic that resulted in across-the-board selling on Wednesday, the Sensex on Thursday rose 210 points on strong Asian trends but pared some of the gains to close at 16,070.48, a rise of 40.39 points.
The 30-share barometer touched a high of 16,240.18 in late morning trade on positive opening across Asian stocks. But a weak opening in Europe along with rupee touching a record intra-day low of 54.58 nudged cautious investors to book some profits, said brokers.
On Wednesday, Sensex had fallen 298.16 points, or 1.83 per cent, after a global turmoil in financial markets on fears of Greece's possible exit from Eurozone.
Brokers also said the investors are still wary about the present uncertain scenario and preferred to lock gains even at current 4-month low levels. For the overall market, 1,340 stocks gained while 1,368 counters fell.
The rupee opened and soon touched all-time low of 54.58 but the Reserve Bank of India (RBI) action saw it recovering some lost ground.
Moses Harding, Head - ALCO and Economic & Market Research, IndusInd Bank said: "Rupee weakened in the early sessions as dollar strengthened against euro. However, there was some kind of intervention from the RBI with selling of dollars which has supported the domestic currency."
The sustained fall in the rupee against the US dollar to a new record low was not providing any support to the weak market sentiment, they added.
"After the initial strong start, Indian stocks succumbed to selling pressure on back of weaker opening seen in European markets and weakening rupee," said Milan Bavishi, Head Research, Inventure Growth & Securities.
ITC with a 3.14 per cent rise Thursday led the Sensex gainers.
The 50-share NSE Nifty rose by 11.95 points, or 0.25 per cent, to 4,870.20.