The BSE Sensex climbed 1.95 percent on Friday, its biggest single-day percentage gain since June 29, tracking strong global markets after the European Central Bank's commitment to bond-buying plan revived appetite for risk.
Gains in blue chips led by Reliance Industries Ltd
Indian stock markets are keenly watching if the government can push forward foreign direct investment and fuel price hike via executive decisions as the monsoon session of the deadlocked parliament ends on Friday.
Investors' anxiety is seen rising, as prolonged wait for much touted reform measures is expected to gather further pace next week, ahead of the Reserve Bank of India's policy meeting on September 17.
"Today's jump is just ECB effect but any falls in the next couple of days would be buying opportunity, as I think Chidambaram would achieve reforms on fuel price hike, GAAR and retro tax in September," said Deven Choksey, MD, K R Choksey Securities.
"Reforms have to come ahead of RBI meet otherwise the bank will not ease. RBI has very clearly communicated that government has to do its part on reforms before it eases," Choksey added.
The BSE index rose 1.95 percent to end at 17,683.73 points, marking its second day of gains.
The 50-share NSE index ended up 1.98 percent at 5,342.10 points, closing above its psychologically important 50 day-moving average of 5271.41 points.
Markets also await key macroeconomic data next week. July industrial output data to be released on September 12 and August headline inflation on September 14.
Data points will also be key ahead of RBI's monetary policy review on September 17.
Markets expect July IIP growth of around 0.3 percent while August inflation is seen around 7 percent.
Indian stock trading in both Bombay Stock Exchange and National Stock Exchange will be opened for 1-1/2 hours on Saturday, September 8 as the BSE is testing its disaster recovery software.
Trading will start at 11:15 a.m. India Time and end at 12:45 p.m. for both exchanges.
CLSA in a report said under-weight trade on Reliance Industries Ltd
Shares in Reliance Industries rose 3.1 percent.
Nomura said about 28 percent of Bharat Heavy Electricals Ltd's
Shares in BHEL ended 1.9 percent higher.
Deutsche Bank upgraded India Cements Ltd
India Cements ended 3.6 percent higher.
Infosys rose 2.7 percent.
Shares in oil marketing companies including Hindustan Petroleum Corp Ltd