Mumbai (Reuters) – The BSE Sensex posted its second straight rise on Wednesday to close up 1.65 percent, its best single-day percentage rise in nearly two weeks, led by export-focused software companies and financials on renewed growth hopes.
Technology companies TCS and Infosys, which draw more than 50 percent of revenue from the United States, gained 3.6 and 1.3 percent respectively after a weaker rupee pushed buying in the sector.
A favourable liquidity backdrop fuelled by foreign fund flows ahead of fourth quarter earnings is expected to overcome fiscal and political concerns which have been a drag on local stocks, analysts said.
Foreign institutional investors (FIIs) have been heavy buyers of Indian equities, having pumped in a net $1.4 billion in just seven straight sessions to Monday.
Banks extended gains on short-covering and on market talk of a possible near-term rate cut by the Reserve Bank of India.
Top private lender ICICI Bank rose 2.8 percent, while smaller rival HDFC Bank was up 2 percent. State Bank of India gained 2.1 percent.
The main 30-share BSE index rose 285.53 points to 17,601.71, with 24 of its components advancing.
The 50-share Nifty index rose above its 50-day moving average to end up 1.71 percent at 5,364.95.
“The budget effect is getting over and there was block-buying observed in the market,” said Hitash Dang, vice president at Jaypee Capital.
However, analysts also said that the current rally was temporary as inflation worries persist.
“Downside (for the index) is limited, but there is no trigger for a major upward movement,” Ambareesh Baliga, chief operating officer at Way2Wealth Brokers said.
Shares in software services firm Tech Mahindra rose 5.6 percent after its board approved merging Mahindra Satyam with itself. Shares in Mahindra Satyam ended up 4.7 percent.
Shares in GVK Power & Infrastructure Ltd jumped 4.2 percent after its Australia unit’s chief executive told Reuters the company was looking to sell its stakes in the Alpha coal project and related port and rail assets in Australia to help fund the $10 billion cost of the projects.
Positive sentiment in index stocks turned the short-covering in Larsen and Toubro and Bharat Heavy Electricals Ltd into building of fresh long-term positions, leading to heavy buying, Nandish Patel, derivatives analyst at brokerage Sharekhan said.
L&T gained 4.6 percent, while BHEL rose 2.94 percent.