Monday, the Indian market shed its early gains to close modestly lower for the day, as investors took profits keeping a close eye on corporate earnings as well as the monetary policy review meeting due on Tuesday.

The central bank will hold reverse repo rate due to excess liquidity in the system and wider spreads between benchmark policy rates and deposit and lending rates, but it may reduce repo rate by 50 basis points, Goldman Sachs said in its preview report.

A mixed trend in the Asian and the European markets and weak US futures also led to unwinding of long positions in the afternoon.

The market was extremely volatile. The BSE Sensex opened almost flat at 11,065 and rose to a high of 11,210 in early trading. After remaining in positive terrain for most part of the day, the Sensex fell to the day's low of 10,863 before recovering considerably to finish at 10,979, down 44 points or 0.40% over the previous close. Meanwhile, the S&P CNX Nifty fell a modest 3 points or 0.08% to 3,382.

Second-line stocks, however, witnessed steady buying activity all through the day. The broad-based BSE 500 index rose 0.45%, the small-cap index gained 1.51% and the mid-cap index added 1.62%. On the BSE, the market breadth was fairly positive, with advancers outnumbering decliners by 1495 to 1033.

Sector-wise, while metal, capital goods, consumer durable and realty stocks closed with sharp gains, stocks in the banking and the FMCG sector bore the brunt of the selling.

Among the major decliners, ICICI Bank and NTPC tumbled around 3.38% each, Hindalco Industries fell 2.46%, Grasim Industries declined 2.42%, Tata Power lost 2.39% and TCS moved down 2.21%.

HDFC, ITC, Sun Pharma, Ranbaxy Laboratories, Reliance Communication and State Bank of India were the other prominent losers.

However, Reliance Infrastructure rallied 5.83%, Jaiprakash Associates advanced 5.02% and Tata Motors gained 4.15%. Sterlite Industries, Larsen & Toubro, Tata Steel, Bharti Airtel, ACC, BHEL, DLF and ONGC also ended firm.

Among stocks in the hospitality industry, Hotel Leela Venture jumped 4.56%, EIH Associated Hotels soared 5.90%, Jaypee Hotels gained 3.08% and Asian Hotels closed up 0.38% amid reports that the government will soon give infrastructure status to the tourism sector to enable hotels get cheaper loans for new projects.

Satyam Computers advanced 4.51% on reports that Tech Mahindra, the new owner of fraud-hit Satyam will cut jobs at the beleaguered IT firm to make it a viable business entity. On the other hand, Tech Mahindra closed down 0.27%.

Ahluwalia Contracts surged up 5% on receiving orders worth Rs.352.98 crore from different vendors. Oudh Sugar Mill tumbled nearly 5% after its standalone net profit for the third quarter ended March declined to Rs.10.8 crore from Rs.16.7 crore in the corresponding period last year.

Telecom service provider Tata Teleservices rose 1% on reports that it has drawn up a capex plan of two billion dollar for its upcoming GSM-based mobile services in the current financial year.

Seamec jumped 5% on bagging two orders worth $20.59 million from Dubai-based Dulam International for deployment of a vessel. Power Finance Corporation soared 4.88% on reporting strong quarterly results.

Polaris Software climbed nearly 13% after the company's net profit grew an impressive 79% year-over-year for the twelve months ended March. GMR Infrastructure surged up 9.53% after its subsidiary Delhi International Airport commenced commercial operations.

Jindal Steel & Power zoomed 8.50% and Max India rose 1.30% on execution of block deals on the stock exchanges. Southern Petrochemicals rallied nearly 5% on reports about Asset Reconstruction Company of India divesting its stake in the company.

Merck gained 1.01% despite reporting a 47% decline in net profit to Rs.8.61 crore in the quarter ended March compared to Rs.16.19 crore in the same quarter last year. Clutch Auto tumbled 3.57% on reporting a 40% decline in its net profit for the three months ended March.

Reliance topped the traded value with a turnover of Rs.247.75 crore followed by Reliance Capital (Rs.244.20 crore), Reliance Infrastructure (Rs.236 crore), Unitech (Rs.191 crore) and ICICI Bank (Rs.175.66 crore).

Unitech led the traded volume with trades of around 3.49 crore shares followed by Cals Refineries (1.71 crore), IFCI (1.50 crore), Reliance Natural Resources (1.48 crore) and Satyam (1.12 crore).

The world economy is expected to partially recover by September and if that happens, the Indian economy will return to growth rates of 8-9%, the Prime Minister Manmohan Singh told reporters at a news conference.

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