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The Nifty and Sensex rose sharply in late evening trade following a recovery in European markets and rupee appreciation.
The Nifty gained 86 points to close at 4921.4 (1.77 per cent). The Sensex added 274 points (1.72 per cent) to close at 16,222.3.
Dealers said that markets were oversold and saw a large number of traders covering their short positions.
“The expectation that some more measures to reduce fiscal deficit may happen led to a feel good factor,” said Mr Arun Kejriwal, Director KRIS Research.
“A further rise, on good overseas cues and news, may be seen, before we revert to the earlier trend.”
FIIs sold equity worth Rs 106 crore in the net while DIIs were net buyers of Rs 130 crore. Retail investors on the BSE bought Rs 13 crore worth of equity in the net.
All the indices on the NSE and BSE closed in the green.
Though oil and gas indices closed in the green, Indian Oil and HPCL closed in the red.
BPCL closed positive (Rs 725.90) on the BSE up Rs 4 per share and lost 20 paise on the NSE to close at Rs 722 per share.
“There is expectation of at least a two rupee hike in diesel prices,” said an oil and gas analyst with an Indian brokerage.
Volatility decreased six per cent and the India Vix closed at 25.49.
Rupee recovers
The rupee staged a smart recovery on dollar sales by a leading German custodial bank and nationalised banks.
The Indian unit, which opened weaker at 56.20, closed stronger at 55.64 to the dollar against the previous close of 56. Intraday it tested a low of 56.38 which triggered heavy dollar sales.
Hints from the RBI Governor, Dr D. Subbarao, that the central bank may sell dollars directly to oil companies and consider the possibility of dollar bond issuances boosted market sentiment.
Dollars flows were healthy as today was the last day for exporters to convert 50 per cent of their balances in the Exchange Earners' Foreign Currency Account into rupees. The Euro strengthening against the dollar a tad also buoyed the rupee.
> raghavendrarao.k@thehindu.co.in
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