By Abhishek Vishnoi
MUMBAI (Reuters) - The BSE Sensex rose on Tuesday, although on its lowest volume in nearly 1-1/2 months, led by gains in technology shares that were aided by a weak rupee and attractive short-term valuations due to the recent underperformance of the sector.
Sentiment also got a boost as foreign institutional investors bought $50.2 million worth of shares on Monday, totalling nearly 70 billion rupees worth of inflows over the previous eight sessions.
Deutsche Bank also said fears of foreign institutional investors capitulation are receding following governor Raghuram Rajan's recent announcements, supportive trade data and easing investment facilitation in debt markets.
However, caution prevailed ahead of the U.S. Federal Reserve's two-day policy meeting, at which it is widely expected to begin withdrawing stimulus, followed by the central bank policy review on September 20.
"Nifty was showing indecision in range 5800-5850 today. Even though it closed near 5850 level, volumes were much lower and market breadth was weak," said Rakesh Goyal, senior vice president at Bonanza Portfolio Ltd.
The outcome of the Federal Reserve meet and RBI policy review will decide the market trend from here onwards, he added.
The BSE Sensex rose 0.31 percent, or 61.56 points, to end at 19,804.03, although on its lowest volumes since August 2, Thomson Reuters data showed.
The broader Nifty rose 0.17 percent, or 9.65 points, to end at 5,850.20, after earlier slipping below its 200-day moving average for a brief period.
Shares in IT companies gained, tracking weakness in the rupee and as recent underperformance made their short-term valuations attractive, dealers said.
Tata Consultancy Services Ltd
Ranbaxy Laboratories Ltd
Dr. Reddy's Laboratories Ltd
GMR Infrastructure Ltd
However, among decliners, India's gold-based non-banking lenders slumped after the Reserve Bank of India tightened rules on Monday for such companies, in line with the recommendations of an internal panel.
Muthoot Finance Ltd
Bank shares also edged lower ahead of key central bank meetings: ICICI Bank Ltd
(Editing by Sunil Nair)