NEW DELHI: Indian equity indices returned to winning ways on Monday, buoyed by sustained buying in pharma, financial, capital goods, metal and power stocks amid revival in global cues.

Investors lapped up beaten-down stocks from across the sectors, shrugging off pessimism that had hit Dalal Street in the previous few sessions. The reintroduction of LTCG tax and widening fiscal deficit along with concern over rising inflation were the other key factors that had made market nervous.

On Monday, the Nifty50 index closed 85 points, or 0.81 per cent, up at 10,540, while the BSE Sensex added 295 points, or 0.87 per cent, to close at 34,300.

In the Nifty50 pack, 33 stocks settled in the green and 17 in the red.

The BSE Midcap and Smallcap indices outperformed Sensex, closing 1.31 per cent and 1.60 per cent up, respectively.

"Markets witnessed a breather and gained nearly a per cent. Global cues will continue to dominate our market trend, in absence of any major event. Nifty may some bounce or consolidate further however sustainability at higher level seems difficult. Traders should use further recovery to reduce longs and creating fresh shorts. PSU banks are still weakest while others are seeing mixed trend," said Jayant Manglik, President, Religare.

Monday's trade saw signs of recovery as investors chose to buy across the board, with pharma, bank, financials, auto and metal counters being the most preferred choice.

Shares of Tata Steel climbed over 4 per cent after the company reported a five-fold jump in its profit in the December quarter.

Shares of ONGC also saw their value rising today after reports emerged that the company-led consortium of Indian state oil firms has been awarded 10 per cent stake in Abu Dhabi's offshore Lower Zakum Concession for $600 million.

Aurobindo Pharma, UPL and YES Bank rose nearly 3 per cent in the Nifty50 index on Monday.

On the other hand, shares of State Bank of India (SBI) saw its fortunes slide on Monday with a drop of nearly 3 per cent after the lender reported its first quarterly loss in 17 years.

HCL Technologies, Bharat Petroleum Corporation and Bharti Infratel also figured among the losers of the day.

Among the sectors, Nifty IT and PSU bank indices closed in the red, while all other sectoral indices closed the day in the green.

IT majors HCL Tech, Tech Mahindra, Infosys and Tata Consultancy Services remained bearish on Monday.

As many as 36 stocks hit fresh 52-week highs on NSE, compared with 13 stocks that hit their new 52-week lows on Monday.

Globally, European shares recovered from six-month lows on Monday, while Asian peers remained mixed.