Stocks rose over 1.5 per cent on Friday, posting their first weekly gain in four, as a rebound in commodity prices and Bank of Japan's bold move to adopt negative interest rates ended a tough month for markets with a flourish.
Asian markets gained between 1 per cent and 3 per cent as BoJ's move surprised investors, most of whom had believed Japanese policymakers were too cautious to ever adopt such a radical measure.
The rally also got legs from global oil prices that were trading above $34 a barrel and heading towards their second weekly gain.
"Oil prices have recovered 20 per cent from their lows and metal prices have firmed up supporting the market," said G Chokkalingam, founder of Equinomics, a Mumbai-based research and fund advisory firm.
The Sensex gained 401.12 points or 1.64 per cent to 24,870.69. The 30-share Sensex had lost 22.82 points in the previous choppy session. For the week, it rose 1.78 percent but fell 4.77 per cent in January.
Similarly, the NSE NIfty rose 138.90 points or 1.8 per cent at 7,563.55. Volatility was down 3.6 per cent with the India Vix quoting at 17.24.
For the week, the index gained 1.9 per cent, its first weekly gain in four. It shed 4.8 per cent in January in its worst monthly performance since August 2015.
Top 5 Sensex gainers: Hero MotoCorp (+4.9%), Sun Pharma (+4.9%), Coal India (+4.7%), Bajaj Auto (+3.5%) and Dr Reddy's (+3.4%).
Losers included SBI (-3.1%), Tata Steel (-2.6%), ICICI Bank (-1.7%), NTPC (-1.4%) and ITC (-0.19%).
Shares of ICICI Bank and Maruti Suzuki were dragged down by muted third quarter earnings announced after trading hours yesterday.
Gains were led by blue-chip stocks such as Reliance, Housing Development Finance Corp and Infosys
YES Bank surged 11.05 per cent after the lender reported a better-than-expected 25 per cent increase in quarterly profit.
Vedanta was trading 6.3 per cent higher despite reporting a 99 per cent fall in profit after the mining company said it was making efforts to cut costs aggressively.
Larsen & Toubro was trading 2 per cent higher ahead of reporting results due later in the day.
Except telecom, all sectoral indices of BSE led by consumer durables, metal, energy, and power were in the positive zone, rising by up to 3.2 per cent.
Global markets
World shares jumped and the yen slumped on Friday after the Bank of Japan stunned markets by taking one of its main interest rates into negative territory, its boldest step yet to reinflate the economy.
The yield on Japanese benchmark government bonds plunged to record lows after the central said it would charge 0.1 per cent for excess reserves parked with the institution, an aggressive policy pioneered by the European Central Bank. European shares tracked Asian stock markets higher, with the pan-European FTSEurofirst 300 index bouncing back 1.2 per cent by 0930 GMT, having fallen 1.7 per cent on Thursday.
MSCI's broadest index of Asia-Pacific shares outside Japan added 1.8 per cent, up 2.7 per cent for the week .