Short covering-led rally in last leg turns D-Street green on a dull day

"The sudden gains in the just before closing was due to the buying seen in some like TCS and , Bharti Airtel, L&T, Mahindra & Mahindra and Axis Bank, which pushed the Nifty upwards," said Aamar Deo Singh, senior vice president of research at . "The weekly expiry of Nifty also led to some short covering in the market."

Singh said that Nifty has seen a pullback from its previous support zone of 22,300-22,400 and needs to sustain above these levels to sustain this momentum.

While the US markets made fresh new highs on Wednesday, India has been underperforming various global markets this month. The Nifty has fallen 0.9% and the Sensex is down 1.1% to date in May.

"The Indian markets have been underperforming lately owing to election-induced volatility," said Sriram Velayudhan, senior vice president of alternative research at . "After the first and second phases of voting, traders seemed nervous. However, today's move should soothe the nerves." Velayudhan said it is important that the Nifty has also closed above its key resistance of 22,300 for the momentum to continue.

The selling from foreign portfolio investors () subsided, as they offloaded shares worth ₹776.49 crore, against a daily average of ₹2,528 crore in May so far. Domestic funds were buyers to the tune of ₹2,127.81 crore.

"The long-short ratio had also declined to 0.3 earlier, and we saw some heavy short position recovery in the market on Thursday, which led it to close upwards," said Kapil Shah, technical analyst at . "Nifty may touch 22,500 in the short term and is set for a range-bound up-move."

Nifty's India Volatility Index or VIX - a fear gauge - fell 1.37% to 20 after the recent surge, indicating some easing of risk perception among traders.