NSE index hit its highest level in more than 10 months on Friday and its biggest weekly gain in five as expectations of a good monsoon and economic reform hopes continued to support auto and consumer goods stocks.
The NSE index ended up 40.6 points or 0.49 per cent at 8,328.35, after earlier rising as much as 0.83 per cent to its highest since August 20, 2015.
The benchmark BSE index closed higher by 145.19 points or 0.54 per cent at 27,144.91, after earlier touching its highest since October 27, 2015.
For the week, the NSE index rose 2.5 per cent, while the BSE index gained 2.8 per cent, their biggest weekly gains since the week ended on May 27.
Barring IT and TECk, all other BSE sectoral indices ended in the green. Among them, oil & gas index gained the most by 2.76 per cent, capital goods 2.1 per cent, FMCG 1.85 per cent and PSU 1.6 per cent, while IT index was down 0.37 per cent and TECk 0.16 per cent.
Top five Sensex gainers were ONGC (+3.72%), L&T (+2.97%), ITC (+2.83%), Dr Reddy's (+2.77%) and GAIL (+2.61%), while the major losers were TCS (-1.92%), Adani Ports (-1.04%), Coal India (-0.97%), Bajaj Auto (-0.65%) and HDFC (-0.64%).
The rally was led by consumer goods companies and automakers, with the Nifty FMCG index and the Nifty Auto index gaining 3.04 per cent and 5.93 per cent this week, respectively.
ITC Ltd ended up by nearly 3 per cent and was up about 7 per cent on the week.
Auto stocks such as Hero MotoCorp and TVS Motor Co gained between 4 per cent and 5 per cent this week.
Mumbai-based cooking gas supplier Mahanagar Gas Ltd surged as much as 30.4 per cent on its market debut.
Larsen & Toubro was up 2.97 per cent after a media report said the defence ministry finalised an artillery gun contract with the company.
Software firm KPIT Technologies, which was among the top losers on the NSE, slumped as much as 14.60 per cent to its lowest since May 9, after it forecast lower Q1 revenue.
Global markets
Markets around the world also seemed to have rebounded, with European markets rallying for the third straight session.
A business survey on Friday showed India's manufacturing growth rose to its highest in three months, driven by stronger demand, although firms barely raised prices, leaving the door open for another rate cut by the central bank this year.
Foreign investors had bought a modest $63.4 million shares this week as of Wednesday, after selling $84.90 million last Friday, the day after the Brexit vote.
“The markets have taken cognizance of the fact that major central bankers are quite ready to take action in case of financial concerns in the market,” said Saurabh Jain, assistant vice president of research at SMC Global Securities.
The government's move to open up FDI, federal staff wage hike, an extended monsoon forecast and hopes of tax reforms are helping the recovery, Jain added.
A report by SMC Global said: "Asian stocks climbed, with the regional benchmark index heading for its biggest weekly advance since April, as policy makers signalled looser monetary policies to buffer the impact of Britain's decision to leave the European Union. US stocks rose for a third session on Thursday on mounting expectations for more accommodative policies from global central banks following the U.K.'s vote to leave the European Union last week.US initial jobless claims rose to 268,000, an increase of 10,000 from the previous week's revised level of 258,000. Economists had expected jobless claims to edge up to 266,000 from the 259,000 originally reported for the previous week."