Mumbai, Nov. 5: Stocks staged a smart recovery in late trading today, buoyed by the government’s decision to divest stake in profit making PSUs.

The announcement led to hectic buying in the last hour of trade, and the BSE sensex ended higher by 152 points, or 0.95 per cent, at 16063.90 compared with Wednesday’s close of 15912.13.

Trading began on a dull note today at 15926.13 on weak cues from Asia. It later plunged over 347 points to the day’s low from its earlier close of 15912.13. However, the cabinet decision on divestment led to a sharp rebound, particularly in the last hour of trade. At close, the index had recovered nearly 500 points from its intra-day low of 15564.89.

Brokers said bargain buying in many counters such as telecom coupled with a rise in direct tax collections have helped stocks to close on a positive note. Small-cap and mid-cap stocks attracted brisk buying with their indices rising by 1.82 per cent and 2.02 per cent, respectively.

However, the day belonged to the telecom stocks, which had taken a huge beating in the recent past on concerns that low tariff would hurt the industry’s profitability. Bharti Airtel ended higher by 5 per cent at Rs 320.20, while Reliance Communications gained 5.5 per cent to Rs 178.60.

Though analysts feel that the long-term prospect for equities is positive, they warn that over the short-term, more correction is likely.

“The global economy is still not out of the slowdown. Moreover, the regime of lower interest rates will end over the next couple of months. Because of these factors, one must not expect any major rally in equity values,’’ an analyst said. The government’s decision on divestment is welcome, but the pricing and timing of the issues will be the key drivers, he said.

On the BSE, most of the sectoral indices, barring the IT and FMCG indices, ended positive.