The Sensex and Nifty witnessed an average 1.5 per cent bounce on Wednesday from their six-month lows, but the market mood was still sour.

The markets, weighed down since August by domestic macro issues and the credit crunch due to IL&FS debt defaults, are now cued to global economic fears. Even as Indian markets rose due to the strength of the rupee against the dollar on Wednesday, a fall in Europe markets and US stock futures weighed on the sentiments, analysts told BusinessLine .

The Sensex gained 461 points, or 1.35 per cent, to close at 34,760. The Nifty rose 159 points, or 1.54 per cent, to close at 10,460. The rupee snapped its six-session losing streak to end 18 paise higher at 74.21 against the US dollar.

The US-China trade war and oil at $80 per barrel have led to global economic growth concerns, forcing the IMF this week to cut its world GDP forecasts for the first time in two years.

All eyes are currently on US treasury yields that have been trading near their seven-year high. Analysts say US 10-year benchmark bond yield at over 2 per cent were favoured for equity investments but the same above 3 per cent now are scaring away stock traders. It was trading at 3.23 per cent on Wednesday.

The US markets opened weak with the Dow Jones giving away more than 350 points, or nearly 1.5 per cent, in initial trade. The Nasdaq fell 170 points, or 2.2 per cent, a couple of hours into trading.

Any sharp decline in US markets will push down Indian shares, too, analysts said.

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