The brokerage, in particular, was bullish about Vedanta’s prospects as it upgraded the stock to “overweight” and raised its price target by 36 per cent indicating sharp gains ahead for the company in coming quarters.

All sectors saw buying except IT that continued to fall. However, gains were limited in the benchmark indices.

RBI’s decision to set the cutoff rate at a recent reverse repo auction at 3.99 per cent -- just below the benchmark policy repo rate of 4.00 per cent -- also stoked speculation that the central bank was looking to realign money market rates to the repo rate rather that the reverse repo rate of 3.35 per cent.

The IPO is entirely an offer for sale (OFS) of shares worth up to Rs 688 crore by Evergraph Holdings and shares aggregating up to Rs 112 crore by KA Joseph, according to the DRHP.

Nifty50 formed a bullish candle on the daily timeframe chart with a long lower shadow, indicating buying on every small decline.

The Nifty IT index closed 0.88 per cent down at 34869.75.

The Nifty Bank index closed 0.59 per cent up at 38521.5.

“As inflation turns sticky, there is risk of early taper and rate hike from global side,” says Vaibhav Sanghavi.

“It is definitely time to be cautious. That does not mean one should sell everything and stay in cash. There are pockets of value. One has to be discerning in terms of what one buys at this point in time.”

There was a lot of activity in the PSU banking space along with auto stocks that were in good demand. Profit booking continued in IT names, but small and midcap spaces were buzzing with accumulation across sectors.