Renewed buying in heavyweight stocks prompted by a drop in fears of war between India and Pakistan helped the markets snap its two-day losing streak on Monday.
On Saturday, both India and Pakistan ruled out the possibility of a nuclear war, which had scared the global community and prompted many Western nations to urge their citizens to leave the region.
The BSE sensitive index (Sensex) settled 35.36 points higher at 3,161.09, off the intraday high of 3,185.57. On the NSE, the S&P CNX Nifty index gained 10.95 points to close at 1,039.75. Gainers outnumbered the losers amid heavy volumes.
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Most heavyweight stocks witnessed sustained fund-based buying. FMCG giant Hindustan Lever rose 2.52 per cent on domestic fund-based buying, following reports that the company had launched new healthcare products.
Among other heavyweight stocks, Reliance Industries (up 2.31 per cent to Rs 270.55), ITC (up 1.46 per cent to Rs 620.15) and Reliance Petroleum (up 1.06 per cent to Rs 23.90) settled higher on value-based buying at lower levels.
Select auto stocks hogged the limelight. Tata Engineering (up 3.22 per cent to Rs 125.15) improved on hopes of an imminent turnaround.
Hero Honda Motors (up 2.66 per cent to Rs 333.60) recorded modest gains. But Bajaj Auto (down 1.01 per cent to Rs 479.65) slipped from the day's high of Rs 489.95 on selling pressure Tata Steel settled 8.11 per cent higher at Rs 118.65 on sustained buying interest. Bhushan Steel (up 20 per cent to Rs 29.10), Steel Authority of India Ltd (up 13.69 per cent to Rs 9.55), Jindal Strips (up 11.42 per cent to Rs 70.75), and Jindal Steel (up 7.38 per cent to Rs 179) also gained ground.
Meanwhile, technology stocks witnessed a mixed trend. Infosys Technologies slipped 1.96 per cent to Rs 3,315.60.
However, HCL Technologies (up 3.20 per cent to Rs 228.75) recovered, after it announced on Saturday its acquisition of US-based Gulf Computers Inc.
Frontline stocks such as Mascot Systems (up 6 per cent to Rs 236.85), SSI (up 2.63 per cent to Rs 146.45), Digital GlobalSoft (up 1.76 per cent to Rs 166.90), NIIT (up 3.29 per cent to Rs 258), Hughes Software (up 1.37 per cent to Rs 230.20) and Wipro (up 0.19 per cent to Rs 1,522.95) ended higher on selective buying interest.