Hopes on positive outcomes of the US and Japanese monetary policies, coupled with buying activity by domestic investors, supported the upward movement of the Indian equity markets on Monday.
Consequently, a barometer index of the Indian equity markets closed the day's trade with gains of 50 points.
Initially, both the bellwether indices opened on a positive note in sync with their Asian peers. Even the firm closing of the domestic and the US markets last week supported the upward trajectory.
The short-covering rally was supported by firm oil prices which remained above the $30-mark.
Besides, speculations around Saudi Aramco's reported plans for an IPO (Initial Public Offering) added positive vibes to the global and Indian markets.
Expectations of additional stimulus in Europe and Japan boosted investors' confidence.
Furthermore, healthy buying activity by the domestic institutional investors (DIIs) buoyed equity markets.
DIIs have remained buyers for the thirteenth consecutive day, absorbing the selling spree by foreign investors.
However, gains were capped by profit bookings and caution over the upcoming rate setting meeting of the FOMC (Federal Open Market Committee) scheduled for January 27-28.
The FOMC assumes significance as higher interest rates in the US are expected to lead away FPIs (Foreign Portfolio Investors) from emerging markets such as India.
Nevertheless, investors priced-in possibility of the US Fed not raising interest rates given the financial turmoil in the global equity markets.
In addition, selling pressure was witnessed on account of the F&O (Futures and Options) expiry slated for Thursday and weak opening of the European markets.
The volatility index dropped by three percent as indices entered a consolidation phase.
The 30-scrip sensitive index (Sensex) of the S&P Bombay Stock Exchange (BSE) gained 50 points or 0.21 percent.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) ended the day's trade flat. It inched up by 14 points or 0.18 percent to 7,436.15 points.
The S&P BSE Sensex, which opened at 24,540.97 points, closed at 24,485.95 points, up 50.29 points or 0.21 percent from the previous day's close at 24,435.66 points.
The Sensex touched a high of 24,650.57 points and a low of 24,433.67 points during the intra-day trade.
The S&P BSE market breadth favoured the bulls with an advance decline ratio of nearly 2:1. There were 1,717 advances and 940 declines.
Vaibhav Agarwal, vice president and research head at Angel Broking, elaborated that profit booking at higher levels and weak opening in Europe resulted in markets giving up early gains.
"The broader markets however continued to remain positive with the small cap index up significantly higher than the benchmarks," Agarwal explained.
"In the absence of any major trigger, we expect markets to continue to react to global cues with some selling pressure ahead of the F&O expiry."
Nitasha Shankar, vice president for research with YES Securities, cited bank index gave up its morning gains led by profit booking in the PSU (public sector undertaking) banks.
"Auto, PSU bank and media indices ended trade in the red, while metal, pharma and IT (information technology) ended in the green led by short covering," Shankar noted.
In contrast to equities rupee weakened during the day's trade. It closed 20 paise down at 67.83 to a US dollar from its previous close of 67.63 to a greenback.
"Though the opening was stronger against dollar, but relentless demand from importers and arbitrageurs pulled the pair higher to close at day's highest point," Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities, told IANS.
"With EM (emerging markets) currencies under pressure against US Dollar today, there was a spill over into the rupee."
The foreign institutional investors (FIIs) were net sellers during the day's trade, while DIIs were net buyers.
According to data with stock exchanges, FIIs divested Rs.91.15 crore, while DIIs bought stocks worth Rs.307.89 crore.
Sector-wise, healthy buying was observed in stocks of consumer durables, healthcare and metal. In contrast, automobile, capital goods and oil and gas sectors came under intense selling pressure.
The S&P BSE consumer durables index augmented by 157.26 points, healthcare index gained by 150.76 points and metal index swelled by 105.27 points.
However, the S&P BSE automobile index receded by 116.26 points, capital goods index declined by 113.42 points and oil and gas index dipped by 21.06 points.
Major Sensex gainers during Monday's trade were Tata Steel, up 2.73 percent at Rs.253.85; Sun Pharma, up 2.25 percent at Rs.807.80, ONGC, up 1.57 percent at Rs.219.85, Coal India, up 1.52 percent at Rs.304.50; and ICICI Bank, up 1.46 percent at Rs.236.15.
Major Sensex losers during the day's trade were Gail, down 3.09 percent at Rs.356.10; Hero MotoCorp, down 2.52 percent at Rs.2,520.80; Larsen and Toubro (L&T), down 1.90 percent at Rs.332.90; and Adani Ports, down 1.49 percent at Rs.218.40.
