After two days of losses, the 30-share index touched an intra-day low of 19,462.92 but then progressed upwards to end at 19,501.08 -- a gain of 32.93 points, or 0.17 per cent.
Brokers said trading remained cautious ahead of Budget this month-end and reduced positions to pick up fundamentally strong scrips. While Tata Steel led 17 gainers in Sensex with 2.49 per cent rise, HDFC, L&T and HUL closed up in 1.5-1.9 per cent range. SBI, Bhel, Sterlite and Hero Moto also closed up.
"As we move towards Budget, investors might remain on sidelines to see the outcome and then decide the future course," said Nagji K Rita,CMD, Inventure Growth & Securities.
RIL gained after Telecom Commission approved provision for companies holding internet services licences with spectrum like Reliance Jio Infocomm (RJI) to provide phone call service by paying additional fee of Rs 1,658 crore each.
Outside the benchmark indices, Jet Airways plunged 7.7 per cent amid reports Etihad may revise a deal to buy stake.
Sugar scrips like EID Parry, Shree Renuka and Bajaj Hindusthan gained 4-6 per cent on hopes sector deregulation soon.
DLF gained 5 per cent fter recent losses post-earnings.
Experts said gains were capped to some extent due to late profit booking, Moody's warning on India's widening trade deficit and tepid activity in global markets.
Sectorally, the Realty sector index gained the most at 2.08 per cent, followed by Capital Goods at 1.18 per cent, Power index at 1.03 per cent and Metal index at 0.49 per cent.
The NSE 50-share Nifty also moved up by 10.80 points or 0.18 per cent to finish at 5,898.20. "A move past 5,920 could provide sustainable recovery," said Amar Ambani, Head of Research, IIFL.
Foreign institutional investors (FIIs) bought shares worth a net Rs 247.30 crore on last Friday, as per provisional data from the stock exchanges.
Globally, barring Hang Seng, which eased by 0.27 per cent, other indices closed up with yen's downtrend boosting Japanese stocks. Indices in Japan, Shanghai, Singpaore, Korea and Taiwan ended higher by 0.04-2.05 per cent today.
However, Europe showed a mixed trend. Benchmark indices in France and London eased by 0.02 per cent to 0.35 per cent while Germany's DAX was last quoting 0.18 per cent up.
Turning the Indian market, 17 scrips out of the 30-share Sensex firmed up while 13 finished with losses.
Major gainers from the Sensex pack were Tata Steel (2.49 pc), HUL (1.89 pc), Sterlite (1.76 pc), L&T (1.57 pc), HDFC (1.47 pc), BHEL (1.22 pc), Hero Motocorp (1.20 pc), SBI (1.29 pc) Hindalco (1.18 pc) and Wipro (0.81 pc).
However, Jindal Steel dropped by 1.81 per cent, followed by Coal India (1.77 pc), ONGC (1.35 pc), Dr Reddy's (1.24 pc), Bajaj Auto (1.17 pc) and TCS (1.12 pc).
The market breadth turned positive as 1,245 scrips ended higher, 860 stocks declined while 874 ruled steady.
Total turnover dropped further to Rs 1,607.73 crore from last Friday's level of Rs 1,825.03 crore.
Indian shares edge higher in countdown ahead of budget
Indian shares edged higher on Monday, marginally recovering after hitting their 2013 lows in the previous session, as recent underperformers such as Larsen & Toubro rose, while DLF gained after an executive told analysts earnings would improve.
Shares are expected to be range-bound until the 2013/14 budget is unveiled on Feb. 28, in a critical test of whether the government will announce a plan to contain the fiscal and current account deficits.
India's finance minister plans to cut the public spending target for fiscal 2013/14 by up to 10 percent from this year's original target, government sources told Reuters, in what would be the most austere budget in recent history as he tries to avert a sovereign credit downgrade.
Such a plan could spark gains in domestic shares. After surging 25.7 percent in 2012, the benchmark BSE index has stalled and is up only 0.38 percent so far this year.
"Earnings season has been not bad but not good either, and now eyes are on budget which has to be responsible as exports are not looking good," G. Chokkalingam, executive director and chief investment officer, Centrum Wealth Management, said.
"You are dependent only on FII money to support current account deficit, so finance minister has to favour markets and economy, there is no other choice," he added.The benchmark BSE index rose 0.17 percent, or 32.93 points, to end at 19,501.08, recovering from its lowest close since Dec. 31, 2012, hit on Friday. The broader NSE index rose 0.18 percent, or 10.80 points, to end at 5,898.20.The gains were led by a pick-up in shares where selling was seen as overdone. Larsen & Toubro Ltd gained 1.7 percent after having fallen 6.35 percent as of Friday's close.
State Bank of India gained 1.3 percent. Its shares have fallen 8.4 percent so far this month as on Friday's close, after Oct-Dec earnings disappointed.
Among other gainers, shares in DLF Ltd rose 5 percent, after vice chairman Rajiv Singh indicated earnings would improve and said net debt would fall, according to analysts who attended the company's post-results analyst meeting on Friday. Public sector companies MMTC Ltd and Hindustan Copper Ltd gained 8.2 percent and 3.7 percent respectively on hopes of good demand in the upcoming stake sales by the government.
The government is yet to provide a time frame for the stake sales.
India will allow wireless broadband airwave holders to provide voice services if they pay an additional $306 million, a senior government official said on Monday, a move likely to boost billionaire Mukesh Ambani's Reliance Industries Ltd . Reliance shares ended 0.2 percent higher.
However, Jet Airways fell 7.65 percent, a day after the chairman of Etihad Airways said the Abu Dhabi-based carrier needed to revise the terms of a pending deal to buy a stake in the Indian airline.
Tata Consultancy Services Ltd fell 1.16 percent and Infosys Ltd shares ended 0.3 percent lower on profit taking. They had gained in the previou session on hopes earnings will look up in fiscal 2014 on the back of an improving global economy.For additional stocks on the move double click
FACTORS TO WATCH
* Yen weakens as Japan signals no change to yen policy
* Brent steadies below $118, global growth hopes support
* Dlr up after G20, stocks ease on growth concern
* Foreign institutional investor flows