The Sensex rebounded on Monday by 164 points to close at 25,653.23 as investors ignored a spurt in wholesale inflation as well as forecast of a monsoon delay.
Earlier in the session, banking stocks pulled down the index by 137 points as Bank of Baroda plunged 8.23% on poor show in fourth quarter, highlighting concerns over the slow progress in solving NPA issue at the public sector banks.
Other banking stocks that saw selling pressure included SBI, ICICI Bank and Axis Bank, falling by up to 4.22%.
“A strong recovery in the last hour of trading erased earlier losses, when stocks were largely southbound... after five PSU banks reported net loss in their Q4 results on Friday,” said Anand James, chief market strategist at Geojit BNP Paribas Financial Services.
Crude oil prices globally jumped on reports the market had moved into a supply deficit earlier than expected. The broader markets too showed strength with the BSE mid-cap rising 0.30% and small-cap gaining 0.09%.
The 30-share index after shuttling between 25,351.62 and 25,688.46 settled 163.66 points or 0.64% up at 25,653.23.
The gauge had lost 301 points on Friday due to downbeat economic data amid fears that Sebi’s plan to tighten P-Note norms would hit foreign fund inflows.
The NSE Nifty ended 45.85 points or 0.59% higher at 7,860.75 after moving in a range of 7,772.15 to 7,873.90.
Meanwhile, expensive food items, like pulses, potato and sugar pushed the WPI-based inflation into positive zone for the first time in 18 months at 0.34% in April, hitting the chances of Reserve Bank cutting interest rates soon.
Investor sentiment also remained cautious after Met department on Sunday predicted a six-day delay in the onset of monsoon, which was scheduled to hit Kerala on June 1.
Still, FMCG stocks zoomed, with ITC logging gains of more than 3% at Rs 329.30. It stocks such as Infosys, TCS and Wipro also recorded gains on value-buying. Globally, Asian markets rallied following reports that Japan may postpone a sales tax rise to avoid damaging an already fragile economy. Indices in China, Hong Kong, Japan, Singapore, South Korea and Taiwan closed by higher by 0.04% to 0.84%. Europe was lower with indices in France and the UK down between 0.23% and 0.79%.
Meanwhile, in a report global brokerage major HSBC said it has upgraded Indian equity markets to “neutral”, saying “green shoots” are emerging and increased its Sensex target for the year to 26,000 from 25,000.
According to the financial services major, Indian equity market has underperformed and its premium to the rest of the region is shrinking. Out of the 30-share Sensex pack, 17 scrips ended higher.
Major gainers were Dr Reddy’s (3.16%), HUL (1.85%), HDFC (1.82%), TCS (1.20%), Tata Steel (1.04%), Lupin (1.02%), Asian Paints (0.97%) and Maruti (1.89%).
However, SBI fell 4.22% followed by Cipla (1.47%), Adani Ports (1.38%), ICICI Bank (1.13%) and BHEL (0.94%). Among BSE sectoral and industry indices, FMCG rose 1.58% followed by realty (1.47%), metal (0.77%), IT (0.62%), auto (0.56%), teck (0.53%) and healthcare (0.49%).
While oil&gas fell by (0.41%) followed by capital goods by (0.32%) and teck by (0.22%). The market breadth turned positive as 1,308 stocks ended higher, 1,258 closed lower while 173 ruled steady. The total turnover dropped to Rs 2,260.38 crore from Rs 2,507.83 crore on Friday.