Indian shares ended higher by nearly one per cent on Wednesday with auto and retail sector shares gaining after the Union Cabinet approved a long-awaited pay hike for its employees, while the sentiment was also boosted by a global relief rally as the immediate impact of Brexit began to fade.
Short-covering by participants ahead of June F&O expiry also boosted the domestic sentiment.
The 30-share BSE index Sensex ended higher by 215.84 points or 0.81 per cent at 26,740.39 and the 50-share NSE index Nifty closed up by 75.50 points or 0.93 per cent at 8,203.35, its biggest single-day percentage gain in two weeks.
Barring FMCG, all other BSE sectoral indices ended in the positive zone. Among them, realty index gained the most 3.15 per cent, power 1.66 per cent, infrastructure 1.61 per cent and auto 1.51 per cent, while FMCG index was down 0.14 per cent.
Top five Sensex gainers were Hero MotoCorp (+3.95%), PowerGrid (+2.6%), NTPC (+2.36%), Wipro (+2.21%) and GAIL (+1.55%), while the major losers were Lupin (-0.67%), ITC (-0.58%), Coal India (-0.54%), and Bharti Airtel (-0.18%).
Gainers, losers
Shares of consumer goods and auto makers rose after the Cabinet approved a rise in salaries and pensions for government employees, according to an official, though details of the hike were not immediately available.
Hero MotoCorp was among the top gainers on the Nifty Auto index, rising as much as 4.29 per cent to its highest in nearly three weeks.
Retail stocks Shoppers Stop Ltd and Future Enterprises gained as much as 8.11 per cent and 11.98 per cent, respectively.
Metal stocks also rose, after a government source said the Cabinet cleared a new mineral exploration policy that would allow private companies to carry out standalone exploration for the first time.
Vedanta Ltd jumped 4.1 per cent, Tata Steel Ltd gained 1.77 per cent and Hindalco Industries Ltd rose 2.75 percent.
However, some recent outperformers like ITC Ltd and Hindustan Unilever Ltd ended lower.
Global markets
MSCI's broadest index of Asia-Pacific shares outside Japan rose 1 per cent to recoup around one-third of Friday's stinging loss after Britain voted to leave the European Union.
Aiding sentiment globally was data showing the US economy grew at a 1.1 per cent annualised rate in the first quarter, rather than the 0.8 per cent pace reported last month.
The calmer mood was also reflected in the India Volatility index, which fell about 9 percent on Wednesday after rising 3.37 per cent last Friday.
“The falling volatility clearly indicates that there is some comfort in the market, and that the market has gone out from the event risk,” said Chandan Taparia, a derivatives and technical analyst with Anand Rathi Securities.
“Even after having such a negative global event, the market managed to hold and digest the negative sentiment, which clearly indicates that the Indian market has the potential to move on the higher side.”
A report by SMC Global said: "Market may be supported by 7th Pay Commission announcement as the Cabinet is likely to approve higher increase in basic pay than the nearly 20 per cent recommended for over 1 crore government employees and pensioners. Asian markets is participating in a global rally as the immediate impact of Britain's vote to leave began to fade and investors hoped central banks would announce more stimulus measures. US stocks moved smart on the back of solid US economic data. The euro regained a little ground to $1.1072, while the yen faded a touch to 102.60 per dollar. Crude oil rose as financial traders poured money back into commodities and as a potential strike in Norway and crisis in Venezuela threatened to cut supply. Gold slipped below $1,320 an ounce as buyers cashed in gains from the biggest two-day rally in the metal since late 2008 made last week. US crude halted a three-day losing skid on Tuesday, amid an easing dollar, as threats of an impending worker strike in Norway offset continuing fears of a potential recession throughout the euro area in the wake of last week's historic Brexit referendum. On the New York Mercantile Exchange, WTI crude for August delivery traded between $46.54 and $47.94 a barrel before closing at $47.86, up 1.54 or 3.36% on the session. Previously, US crude futures had tumbled 7% from 10-month highs earlier this month, amid considerable downward pressure from Britain's decision to leave the EU. A session earlier, WTI crude slid below $47 a barrel to touch near six-week lows."