Market shows tepid recovery as banks lead

Stocks on Monday showed resilience in the face of inflation fears as Sensex edged up to end at 27,288, helped by financial stocks, amid buzz that the finance ministry is likely to finalise the capital infusion plan for public sector banks.

However, global markets turned nervous after reports about a hard exit of the UK  from the European Union.

Companies held up well on the earnings front so far, which came as a positive.

The 30-share Sensex ended at 27,288, up 50 points, or 0.18 per cent. The gauge had shed nine points on Friday.

The broader National Stock Exchange Nifty settled 12.45 points up, or 0.15 per cent higher, at 8,412.8. 

Intra-day, it moved between 8,426.7 and 8,374.4.

Meanwhile, WPI inflation rose to 3.39 per cent in December 2016, fuelled by rising prices of petrol and diesel, which tempered mood.

"The positive bias for the market is largely due to better than expected third quarter results so far. Going ahead, market will watch the outcome from GST council meet. Any positive signs will provide further push to the current trajectory," said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services.

There were expectations that Finance Minister Arun Jaitley may address the transient pain of demonetisation by lowering corporate tax rates in the upcoming Budget for 2017-18, which backed the recovery.

SBI surged 1.93 per cent. HDFC Bank, too, rallied 1.21 per cent, in line with the overall upmove, while Axis Bank rose 1.07 per cent. ICICI Bank gained 0.62 per cent.

Asia closed lower and European indices weakened in early session.

Overseas, Asian stocks ended lower, reversing initial gains. Key indices in China, Japan and Hong Kong dropped by up to 1 per cent.

Europe was also trading lower in early deals and key indices like France, Germany and the UK fell by up to 0.75 per cent.

Foreign investors extended their selling and sold shares worth a net Rs 117.59 crore last Friday, as per provisional data released by stock exchanges.

The recovery in Sensex was supported by gains in Tata Steel, Tata Motors, Adani Ports, Hero MotoCorp, HDFC, Lupin, Power Grid, Asian Paints, L&T, Bajaj Auto and Cipla, rising by up to 2.69 per cent.

Infosys, ONGC, RIL, Sun Pharma, GAIL, Bharti Airtel, M&M, NTPC, Coal India, ITC, Maruti Suzuki and Wipro ended lower and capped the gains.

In the Sensex-30 kitty, 17 ended higher while 13 lost.

Sector-wise, the BSE realty index climbed the most, rising 1.61 per cent, followed by consumer durables 0.99 per cent, bankex 0.98 per cent, metal 0.97 per cent and auto 0.56 per cent.

In broader markets, the BSE small-cap rose 0.57 per cent while mid-cap ended 0.27 per cent higher.