After a firm start and a subsequent tight spell in positive territory, the market rallied sharply in the final hour thanks to some frenzied buying in several blue chip stocks from information technology, power, automobile and metal stocks.
Shares from realty, PSU, capital goods, FMCG and banking sectors too saw some hectic buying in late afternoon trade. Oil stocks, which lost their way a bit after a firm start, bounced back as well. Consumer durables and healthcare stocks closed on a mixed note.
A firm trend in Asian and European markets amid expectations of a stimulus from the European Central Bank aided sentiment to a significant extent. Investors were also betting on hopes of some rate cut announcement from PSU banks and some positive announcement on the reforms front from the government. Data showing heavy buying by FIIs in recent weeks too lifted sentiment.
The BSE benchmark Sensex ended with a gain of 194.18 points or 1.1% at 17,885.26, just a few points down from the day's high of 17,898.35. The Nifty index of the National Stock Exchange closed at 5421, slightly off the day's high of 5425.15, recording a gain of 54.70 points or 1.02%. Both Sensex and Nifty hit their highest levels since mid-March 2012.
Infosys opened on a high note following the company winning the case against its former employee Jack Palmer. Trading firm right through the day, the stock ended with a gain of 2.4%.
Hindalco ended nearly 1.5% down on reports that the Odisha State Pollution Control Board has asked the company to shut down the captive power plant of smelter plant near Hirakud in western Odisha in the wake of a breach in the company's ash pond that damaged standing crops in the locality.
Bharti Airtel lost 1.3% following a rating downgrade of the stock. Cairn India, Dr Reddy's Laboratories, Ranbaxy Laboratories, Punjab National Bank, Tata Steel, Hero Motocorp, ITC, Reliance Industries and BPCL also closed weak.
Pantaloon Retail, Nestle India, IRB Infrastructure, LIC Housing Finance, Alstom T&D, Tech Mahindra, MRF, JP Infratech, Gujarat State Petronet, Dish TV India, Aditya Birla Nuvo, Thermax and Financial Technologies also moved up sharply.
Wockhardt, Claris Lifesciences and Mahindra Satyam saw some hectic buying on stock specific news.
The market breadth was slightly positive. Out of 2994 stocks traded on BSE, 1504 stocks moved up. 1355 stocks declined and 135 stocks ended flat.