Mumbai, Feb 4 (IANS): Amidst fears over fiscal slippage, the Indian equity market made gains on Monday as buying picked up in the last hour of the day's trade.

According to analysts, healthy buying in specific stocks along with expectations over lowering of interest rate and major Interim Budget announcements like farm package and enhancement of tax rebate limit guided the equity indices.

However, both the key domestic equity indices languished deep in the red for the better part of the day as investors feared fiscal slippage due to populist measures announced in the Interim Budget on Friday.

"The market rallied from the day's low led by few set of domestic focused companies, oriented at consumption and private banks," said Vinod Nair, Head of Research, Geojit Financial Services Ltd.

Nair added that the market was also looking at the upcoming RBI policy, hoping for a change from calibrated tightening to neutral.

Consequently, the S&P BSE Sensex closed 113.31 points higher at 36,582.74 while the broader Nifty finished at 10,912.25, up 18.60 points.

Consumer durables, energy and oil and gas stocks witnessed healthy buying, while the key healthcare, capital goods and automobile stocks ended in the red.

Stocks price of Reliance Communications (RCOM) declined up to 48 per cent while Dewan Housing Finance Corp (DHFL) lost 10 per cent earlier in the day.

"Market is fearing a fiscal slippage because of various announcements in the Interim Budget, like the higher borrowing programmes of the government.

"Also, the government's estimate of GST collection in FY19 is on the higher side. The nominal GDP growth rate of 11.5 per cent is also difficult to achieve," Rusmik Oza, Head, Fundamental Research, Kotak Securities, told IANS.

He said the capital expenditure provided for in the next year's budget is 6 per cent, which is very low. In addition, the bond market is not happy with the Interim Budget, leading to negative impact on the investors.

According to Deepak Jasani of HDFC Securities, the Budget will continue to have an effect on the market for some more days.

"Fears of slippage is because of government's fiscal deficit target of 3 per cent in FY21. The 3.4 per cent target for next year is also not good.

"It is not possible to reduce 0.4 per cent in a year," he added.

The other factor was the volatile movements in specific stocks like Zee, DHFL and RCOM which is pushing away the retail investors, the analysts noted.

ONGC and Reliance closed with gains over 3 per cent on the BSE while Bajaj Auto, Kotak Mahindra Bank and HDFC gained up to 2 per cent.

Power Grid, Yes Bank, Sun Pharma, NTPC and Mahindra and Mahindra decilined in the range of 2 to 3 per cent.