Indian equity shares reversed losses to end stronger on Monday on optimism ahead of the retail inflation data due later in the day, while the sentiment was boosted after European shares gained on increased mergers and acquisition activity in the healthcare sector.

The domestic share market had earlier dropped as much as 0.5 per cent as lower oil prices hurt energy stocks.

The 30-share BSE index Sensex ended at 27,585.27, up 126.89 points and the the 50-share NSE index Nifty closed at 8,323, up 38.5 points.

Among BSE sectoral indices, capital goods index gained the most by 1.55 per cent, followed by FMCG 1.42 per cent, IT 1.32 per cent and TECk 0.91 per cent. On the other hand, metal index was down 1.68 per cent, followed by oil & gas 1.19 per cent, PSU 0.4 per cent and infrastructure 0.24 per cent.

Major Sensex gainers were HUL 3.84%, L&T 2.29%, Infosys 1.98%, HDFC 1.57% and ICICI Bank 1.27%, while the top five losers were Coal India 4.54%, Hindalco 2.55%, Bajaj Auto 2.03%, Bharti Airtel 1.92% and Hero MotoCorp 1.9%.

Retail inflation , IIP data

Traders will closely watch the retail inflation print, due to be released at 1130 GMT, which is likely to determine the central bank's stance during its monetary policy review on February 3.

A Reuters poll showed the consumer price index accelerating to 5.4 per cent in December from 4.4 per cent in November, but still within the central bank's comfort zone.

Meanwhile, foreign institutional investors have been net sellers of $311.79 million worth shares this month, adding to the weaker sentiment.

“As per expectations, markets have started correcting. We might see some volatile session going forward, but I don’t expect any major fall,’’ said G. Chokkalingam, founder of Equinomics, a research and fund advisory firm.

“Inflation numbers should fall: Expect RBI to cut rates in its February policy,'' he said.

Stock movement

Energy stocks such as Reliance Industries and Oil and Natural Gas Corp were down as global oil prices extended their recent falls.

The slide in oil prices helped offset the positive impact after data on Friday showing US wages fell by the most since the series began in 2006 raised hopes the Federal Reserve would be patient in raising interest rates.

Global oil prices extended their slide after Goldman Sachs lowered its short-term price outlook.

Among other losers, Coal India slumped on media reports that the government plans to sell a 10 per cent stake in the state-run company to raise Rs 24,000 crore ($3.86 billion), citing an unnamed official

However, state-run banks rose as bonds gained ahead of CPI data.

The Nifty and the Sensex opened flat on weak Asian cues.The Nifty opened six points up at 8,291, while Sensex opened 66 points up at 27,524, before slipping into the red.

A report by SMC Investments and Advisors said: "Stocks in Asia traded mostly lower today, with Japan's stock market, the region's largest, closed for a public holiday. The US stock market ended a volatile week on a down note Friday, with strategists blaming the slide, in part, on December's jobs report that revealed a drop in wages.US wholesale inventories climbed by 0.8 per cent in November after rising by an upwardly revised 0.6 per cent in October. Economists had been expecting wholesale inventories to edge up by 0.3 per cent following the 0.4 per cent increase originally reported for the previous month."

European equities gained on Monday, led by rising healthcare stocks, after Shire agreed to buy NPS Pharmaceuticals for $5.2 billion and Roche also struck a deal.

Chemical shares also performed well after US investment bank Citigroup upgraded several European chemicals companies, including BASF.

Asian shares were mixed following a soft finish on Wall Street though the sentiment was supported by speculation the Federal Reserve would be patient in tightening policy given the weakness of wages apparent in the jobs numbers.

Wages fell by the most since the series began in 2006 even as payrolls increased by a brisk 252,000.

Related Topics
comment COMMENT NOW