Mumbai, Dec 11: The domestic equity market reversed all the initial losses to trade higher on Tuesday late-afternoon session, with the S&P BSE Sensex gaining over 130 points.

The gains came on the back of the election trends which showed a narrow lead for the Bharatiya Janata Party (BJP) in Madhya Pradesh, analysts said. Short covering and bargain buying by investors also supported the gains on the indices, they added.

Besides, supportive global cues gave an upward push to the market's trajectory.

The market had lost significantly during the morning trade session on the sudden resignation by RBI Governor Urjit Patel and early election trends which showed BJP in a neck and neck race with the Congress in the three out of five states including Madhya Pradesh.

Around 2.20 p.m, the Sensex traded at 35,095.26, higher by 135.54 points or 0.39 per cent from the previous close of 34,959.72 points.

It opened at 34,584.13 and has so far touched an intra-day high of 35,199.15 and low of 34,426.29 points.

The Nifty50 traded 44.45 points or 0.42 per cent up at 10,532.90 points.

"Indian markets rose after making a higher intra-day bottom from 10.40 a.m. onwards once there was clarity on the state election results. Market participants felt that the performance of the ruling alliance was better than expected in MP and Rajasthan," HDFC Securities' Retail Research Head Deepak Jasani told IANS.

"Positive global markets also aided sentiments. Short-covering along with absence of large selling led to recovery in the markets. PSU Banks saw buying in anticipation of a liberal RBI governor."

On the currency front, the Indian rupee clawed back to some extent and traded around 71.83 per dollar. It closed at 71.34 per dollar on Monday.

"Rupee has recovered well after the knee jerk reaction to RBI governor's resignation forced a sharply lower opening," said Anand James, Chief Market Strategist, Geojit Financial Services.

"Markets looks to have priced in the election results as well, so we are less likely to see any more weakness for now. It also helped that international cues are also supportive with oil and US dollar trading weak."

BJP's MP lead, global cues lift equity indices