Indian share indices the Sensex and the NIfty recovered in late afternoon trade on positive opening in the European markets.

After trading in the negative zone for most part of the day, the Sensex ended 131 points or 0.53 per cent higher at 24,682.48 while the NSE Nifty gained 0.51 per cent or 38.15 points to finish at 7,498.75.

European shares bucked the trend in Asia, rising in early trade thanks to a recovery in oil prices following two days of losses that had culminated in a decline of around 5 percent.

In Britain, investors were eyeing a budget presentation during which finance minister George Osborne is expected to cut public spending and warn that the domestic economy will not escape the global economic turbulence unscathed.

"Given that stocks have been trading near multi-week highs, more prudent players in the markets pared back some of their recent exposure ahead of the conclusion to today's Federal Reserve rate meeting," said Michael Hewson, chief markets strategist at CMC Markets.

"Having said that, today's oil rebound has led to a slightly higher open this morning in Europe."

In early European trade, the FTSEuroFirst 300 index of leading shares was up 0.4 per cent at 1,346 points. Germany's DAX was 0.7 per cent higher, France's CAC 40 up 0.5 per cent and Britain's FTSE 100 gained 0.4 per cent.

The Fed is expected to hold interest rates steady on Wednesday but investors will focus on how comfortable policymakers are in proceeding with the gradual rate hike path they embraced late last year.

Any negative reaction in global markets could impact foreign flows to India. Foreign investors have bought a net $1.67 billion of shares in March, but still remain net sellers of $1.2 billion this year.

"Fed commentary on future rate hikes will be very critical, and that is something which is keeping markets fairly nervous," said Gautam Sinha Roy, a fund manager at Motilal Oswal Asset Management, which has about Rs 9,700 crore ($1.44 billion) in assets under management.

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Of the 50 Nifty stocks, 27 advanced, 22 declined and 1 remained unchanged.

Top Nifty losers : Hindalco slumped 2.7 per cent. Vedanta was down 2.2 per cent, Asian Paints fell 2.1 per cent, Sun Pharma was down 1.09 per cent and YES Bank slipped 0.98 per cent.

Top Nifty gainers : ICICI Bank (+2.5%), Kotak Bank (+2.1%), Axis Bank (+1.6%), Cipla (+1.6%) and HDFC (+1.5%).

Bank Nifty, Financial Services, FMCG, IT, Media and Pharma were among the gainers. Metals was the top loser among the Nifty sectoral indices.

Crompton Greaves (+6.5%), Suzlon (-1.8%) and Unitech (-0.9%) were the most actively traded stocks on the Nifty.

The Sensex lost 253.11 points in the previous session.

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