Meanwhile, the NSE Nifty managed to claw back above the important level of 5200 led by support from oil & gas, technology, capital goods and HDFC group stocks. The index fell 12.05 points to 5,215.70.

Mithil Pradhan, Sr Vice President - Technicals & Derivatives, Violet Arch Capital Advisors believes that upsides are really restricted at this point of time because the weakly and monthly charts both are overbought from a momentum perspective.

European markets like France's CAC, Germany's DAX and Britain's FTSE gradually rose to 1-1.5% since initial trade today, erasing most of the previous day's pull-back and resuming a week-long rally as investors judged the European Central Bank remains committed to bold action to fight the debt crisis.

Markets were also awaiting US jobs data that could fuel expectations of further stimulus from the Federal Reserve. The Dow Jones futures gained 68 points at 15:31 hours IST.

European shares had tanked 1-2.7% on Thursday after European Central Bank President Mario Draghi disappointed some investors by announcing no immediate action to help lower the borrowing costs of Spain and Italy. Spain and Italy markets tumbled around 5% yesterday.

Back home, the Sensex and Nifty gained more than 2% on inflow of foreign money. Foreign institutional investors bought more than Rs 3,000 crore worth of Indian equities since July 27.

The market gained this week, even after getting disappointed by three major events, which were RBI policy on Tuesday, Federal Reserve' decision on Wednesday and European Central Bank on Thursday.

Housing finance company HDFC and private sector lender HDFC Bank gained 0.5-1%.

Top oil & gas producers Reliance Industries and ONGC moved up 0.5% and 1.34%, respectively.

Country's largest power producer NTPC gained 1.84%, rising for the second consecutive session after yesterday's rally of nearly 4% while private power producer Tata Power declined 0.92%.

Top software services exporter TCS and Infosys were marginally higher while their rival Wipro rallied 2%.

India's largest lenders State Bank of India and ICICI Bank were down 2% and 0.5%, respectively. Engineering and construction major Larsen & Tourbo slipped 0.5% whereas power equipment manufacturer gained 0.7%.

Metals stocks hit quite hard on ECB disappointment. Hindalco Industries, Sterlite Industries, Jindal Steel and Tata Steel tanked 2%-2.6%.

Among auto stocks, Tata Motors, Bajaj Auto, Maruti Suzuki and Hero Motocorp were down 0.4-1%. Tractor maker Mahindra & Mahindra fell 1.44% on fears of less buying of tractors due to monsoon deficiency.

DS Pai, Director-Long Range Forecast, India Met Department (IMD) highlighted that rainfall in India is 19% deficient so far because the monsoon didnâ??t pan out as per expectations in July. Further, he said that the rainfall in the next two months is expected to be below normal and around 91%.

Cigarette major ITC and top telecom operator Bharti Airtel slipped over 0.7%.

The broader markets too closed flat. On the National Stock Exchange, decliners outnumbered advancers by 849 to 577.

In the second line shares, Mahindra Satyam gained more than 6% and Berger Paints rose 5% after better than expected numbers in first quarter. Jet Airways went up 0.7% as the company turned profitable for the first time in last six quarters. Marico declined 3% on profit booking; its results in Q1 were quite stronger than expected on every count.

Sugar stocks like Balrampur Chini, Bajaj Hindusthan and Shree Renuka Sugars were up 3-5%.

DB Corp rose 7% and Deccan Chronicle Holdings was up nearly 2% as sources say DB Corp is in talks to acquire DCHLâ??s print business.

United Breweries Holdings and United Spirits were up 1.5%. OnMobile Global surged over 9%.

Dishman Pharma and Kale Consultants rallied more than 5% while both shot up 25% this week on better than expected numbers in Q1.

However, GVK Power, Reliance Power, NCC, REC, Pantaloon Retail, S Kumars and Indiabulls Real were down 3-5%.

(With inputs from CNBC)

14:22 Indian, European stocks recover; Jet Air turns PAT positive European and Indian shares shares staged a slight recovery on Friday from a selloff provoked by the European Central Bank's failure to satisfy investors' hopes of swift action to tackle the debt crisis. Read More »