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Indian stocks gained nearly one per cent on Monday to post their highest close in nearly four weeks, led by renewed buying in financial and pharma stocks although volumes were thin in the year-end holiday season and ahead of F&O expiry on Thursday.
The 30-share BSE index Sensex ended higher by 195.42 points or 0.76 per cent at 26,034.13 and the 50-share NSE index Nifty was up 64.1 points or 0.82 per cent at 7,925.15.
Barring metal and capital goods, all other BSE sectoral indices ended in the green. Among them, healthcare index gained the most by 1.34 per cent, followed by auto 0.96 per cent, infrastructure 0.94 per cent and power 0.93 per cent. On the other hand, metal index was down 0.77 per cent and capital goods 0.1 per cent.
Top five Sensex gainers were Dr Reddy's (+3.52%), NTPC (+3.38%), Tata Motors (+2.84%), ONGC (+2.56%) and Sun Pharma (+2.52%), while the major losers were Tata Steel (-3.59%), Bharti Airtel (-2.14%), M&M (-0.87%), BHEL (-0.49%) and HDFC (-0.38%).
Indian markets are expected to remain volatile ahead of the expiry of futures and options contracts on Thursday as traders churn positions.
Volume is also expected to remain thin with majority of foreign investors away for year-end holidays.
"I don't think 7,950-8,000 on the Nifty will be conquered this week, possibly we'll head lower," said Gaurang Shah, vice president at Geojit BNP Paribas.
"We have corporate earnings in the second week of January, so investors will wait to see that and then immediately after you have the (Union) budget."
Brokers said value-based buying in some blue-chip counters and the rupee rising for the eighth straight session accelerated the upmove.
Besides, covering-up of pending short positions by speculators ahead of the futures and options expiry on Thursday supported the upside, they said.
A report by SMC Global said: "Asian stocks were steady in quiet trade today, drawing heart after a rebound in crude oil that took prices away from multi-year lows. Investors across asset markets were without some of the usual leads as markets in Europe and North America were closed on Friday for Christmas. US stocks slipped on Thursday but posted their biggest weekly gains in more than a month after investors bought shares in the troubled energy sector in a holiday-shortened week. Industrial production in Japan was down a seasonally adjusted 1.0 per cent on month in November, the Ministry of Economy, Trade and Industry said in Monday's preliminary reading - falling for the first time in three months. That missed forecasts for a decline of 0.5 per cent following the 1.4 per cent gain in October. On a yearly basis, industrial production climbed 1.6 per cent - in line with expectations following the 1.4 per cent drop in the previous month."
European shares edged lower on Monday in their first day of trade since the Christmas break, with investors reluctant to place strong bets in thin year-end trading.
Asian stocks dipped on Monday amid a lack of immediate directional cues in light year-end trade, although Japanese shares managed to rise following a rebound in crude oil prices from multiple-year lows.
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