Markets gain third straight day

Indian benchmark share indices ended slightly higher for the third straight session on Monday, after December headline inflation declining to a 2-year low of 7.47% boosted sentiment, led by software and capital goods shares.

The Sensex ended at 16,189, up 35 points and the Nifty ended at 4,874 points, up 8 points.

The Asian markets ended lower on the back of concerns relating to the sovereign debt crisis in the Eurozone and S&P's downgrade of the European economies. The Nikkei ended at 8,378, lower by 1.4% or 122 points. Taiwan and Hang Seng also ended lower by 1% each.

Back home, the headline inflation fell to a two-year low of 7.47% in December 2011 on cheaper food items, a factor which may prompt the Reserve Bank to cut policy rates in the upcoming review. Taking a cue from this, Finance Minister Pranab Mukherjee said the declining rate of price rise indicates improvement in macro-economic parameters and projected March-end numbers at 6-7%.

Moreover, India's December exports rose an estimated annual 6.7% to $25 billion, while imports for the month were at $37.8 billion, leaving a trade deficit of $12.8 billion, Trade Secretary Rahul Khullar said on Monday.

Infosys rebounded to end up 1.9% at Rs 2,634 after the stock was hammered last week in the wake of lower dollar revenue growth guidance. TCS ended up 1.9% ahead of its Oct-Dec earnings on Tuesday. State Bank of India ended up 2.2% on news reports that the bank has received Finance Ministry approval for a capital infusion of Rs 6,000-8,000 crore.

BSE Capital Goods index was the top sectoral gainer, up 2% to end at 9,489 levels.Among capital goods shares, BHEL ended as the top gainer among the Sensex stocks, up 3.7% to end at Rs 277. Among auto shares Maruti Suzuki and Tata Motors were the top gainers.

On the other hand, Reliance Industries was the top loser, down nearly 2.5% to end at Rs 713. the stock fell on news reports that Securities & Exchange Board of India (Sebi) is examining whether RIL made proper disclosure about the acquisition of significant stakes in ETV channels.  It was followed by NTPC, HDFC Bank, DLF, Sun Pharma, HUL and Cipla.

Technology stocks also witnessed renewed buying interest after being hammered down badly during the previous week. The BSE IT index jumped, 1.8% or 99 points to close at 5,580 levels. Auto, FMCG, metal and consumer durable stocks also witnessed some buying interest in trades today.

From the information technology space, Financial Technologies was the top gainer, up 4% at Rs 639. Mphasis, Hexaware and Tech Mahindra were also among the gainers from this sector.

However, Oil & Gas stocks were under pressure led by fall in index heavyweight Reliance Industries. Other losers from this space include, Indian Oil, ONGC, HPCL, BPCL, Gujarat State Petronet, Gail India and Petronet LNG.

Smart movers

LIC Housing Finance moved higher by nearly 3% to its 52-week high level of Rs 247 on reports that a unit of Life Insurance Corp of India has launched a Rs 500 crore venture capital (VC) fund– LICHFL Urban Development Fund– to make investments in housing and infrastructure projects.

UB Group stocks – United Spirits and United Breweries – rallied 5% each on reports that the group will consolidate its foreign alcohol assets ahead of an overseas listing of the brands.

Everonn Education rebounded by 12% to Rs 312, after falling sharply by 20% to it's day’s low of Rs 227, also its lowest level since September 2009, on back of huge volumes.

The broader markets ended on a flat note, the mid-cap index ended at 5,580, down 2 points and the small-cap index ended at 6,192, up 20 points.

BSE market breadth was almost neutral as 1,397 shares advanced while 1,345 shares declined.