Markets opened marginally higher led by oil and select financials but upside gains are likely to be capped ahead of the expiry of September derivative contracts on Thursday.
Further, selling by foreign funds also weighed on sentiment. At 9:35AM, the 30-share Sensex was up 40 points at 26,816 and the 50-share Nifty was up 15 points at 8,032.
Foreign portfolio investors were net sellers in equities to the tune of Rs 1,185 crore (Rs 11.85 billion) in the cash market and sold index futures worth Rs 316 crore, as per provisional stock exchange data.
Meanwhile, the Supreme Court is expected to deliver its final verdict on coal mine allocations later.
The rupee was trading lower at Rs 60.99 compared to the previous close of Rs 60.94.
On Tuesday, the rupee fell by 12 paise to end at one-week low of 60.94 against the US dollar on month-end demand from importers and sharp decline in domestic stock markets.
In Asia, stocks tracked an overnight decline on Wall Street and dipped early on Wednesday, while the dollar was kept in check after U.S. yields fell on geopolitical woes and dovish statements by a Federal Reserve official. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.2 per cent, sliding to a fresh four-month low.
Japanese markets re-opened for trading after a public holiday on Tuesday.
Shares in Japan were trading with marginal losses down 0.4 per cent while Singapore's Straits Times was down 0.1 per cent.
However, shares in China and Hong Kong rebounded today.
Both the Shanghai Composite and Hang Seng were up 0.4-0.8 per cent each. U.S. stocks fell overnight, weighed by downbeat European data and as the first U.S.-led air strikes in Syria against Islamic State fighters dampened investor risk appetite.
The air strikes in Syria, which opened a new front amid shifting Middle East alliances, also garnered demand for safe-haven government debt and pushed U.S.
Treasury yields lower, in turn helping arrest the dollar's recent bull run. The Dow Jones industrial average fell 0.68 per cent, to 17,056, the S&P 500 lost 0.58 per cent, to 1,988 and the Nasdaq Composite dropped 0.42 per cent, to 4,509.
BSE IT, Healthcare, FMCG indices were among the top gainers along with Bankex, Oil and Gas indice.
Index heavyweights ITC, Reliance Industries and Infosys were up 0.5-0.8 per cent each contributing the most to the Sensex gains in early trades.
Other gainers include, M&M, Sun Pharma, Wipro and HUL among others. Market breadth was strong with 901 gainers and 625 losers on the BSE
