After a slightly shaky start and a subsequent long choppy ride, the market edged higher past mid afternoon with investors indulging in some hectic buying amid hopes the Indian economy will see a turnaround and see a 7% growth soon.
A fairly steady trend in European markets too lifted sentiment and prompted investors to pick up stocks.
Information technology and realty stocks had a good outing. Shares from banking, automobile, FMCG, infrastructure, media and services sectors too mostly ended on a bright note.
The BSE benchmark Sensex, which declined to 19,212.92 at one stage, spurted to 19,465.52 in late afternoon trade and eventually ended the session with a gain of 160.93 points or 0.84% at 19,413.54.
The Nifty index of the National Stock Exchange closed at 5863.30, around 15 points off the day's high of 5878, recording a gain of 44.70 points or 0.77%.
Hero Motocorp traded firm right through the session and ended higher by a little over 4%. Maruti Suzuki moved up by over 2%, while Bajaj Auto and Mahindra & Mahindra gained 1% and 0.8%, respectively.
IT heavyweights Tata Consultancy Services (2.1%), Wipro (1.9%) and Infosys (1.3%) closed on a firm note. Capital goods sector majors Larsen & Toubro and BHEL gained 2.1% and 1.3%, respectively.
HDFC Bank, Sterlite Industries, Sun Pharmaceutical Industries, ITC, Cipla, ICICI Bank and HDFC gained 1% - 1.8%. ONGC ended higher by around half a percent.
DLF spurted 3.7%. Asian Paints ended 3.1% up. HCL Technologies, Jaiprakash Associates, BPCL and Sesa Goa gained 1.7% - 2.5%. ACC and Power Grid Corporation also ended notably higher.
Jindal Steel & Power, Hindustan Unilever, Coal India, Ambuja Cements and Tata Motors ended lower by 1% - 2%. Hindalco, Cairn India, Ultratech Cement, Bank of Baroda, GAIL India and Tata Steel also closed weak.
Elder Pharmaceuticals ended with a strong gain following an announcement from the company that it has formed a joint venture with Japan's Kose Corporation to manufacture and market cosmetic products for Indian market.
MMTC and Rashtriya Chemicals & Fertilizers declined ahead of government of India's offer for sale.
Bharat Forge ended with a strong gain of 7.8%. Mahindra & Mahindra Financial Services, Opto Circuits, United Breweries, Wockhardt, Crompton Greaves, Apollo Tyres, MRF, Godrej Consumer Products and Hexaware Technologies gained 3% - 5%.
Adani Enterprises, Asian Paints, United Phosphorus, L&T Finance Holdings, JSW Energy, CESC, Cummins India, Gujarat State Petronet, Zee Entertainment, Mahindra Satyam, IPCA Laboratories, ABB, Muthoot Finance and Shree Cement also rose sharply.
The market breadth was positive. Out of 2961 stocks traded on BSE, 1523 stocks moved up, 1307 stocks declined and 131 stocks ended flat.
Contributing significantly to the market's strong upmove in late afternoon trade was the statement from global ratings agency Moody’s that the worst might be over for India in 2014. Moody's said Indian economy will see a 7% growth by end 2014. The ratings agency pushed India's 2013 GDP forecast to 6.2% from 5.1%.
The agency said that risks around the economy, particularly the fiscal and current account deficits, have begun to recede and the gains in financial markets has started reflecting the rising expectations around the economy as well as lower risk.
Moody's expects India's headline inflation to drop to 6% by year end, which might pave the way for an expected rate cut around mid-2013.