The benchmark BSE Sensex on Tuesday touched a four-month high on hopes that India’s macro-economic environment would improve after euro zone finance ministers agreed on a deal to nurse ailing Spanish banks back to health.
The index closed up 226 points, or 1.4%, at 17,618. Investor sentiment also improved as foreign institutional investors remained net buyers till date in July. Today’s level is the highest for the Sensex after it closed at 17,676 on March 15.
The Nifty also ended up 1.3% at 5,345.
"The euro zone crisis was the main concern at major equity markets around the world and Tuesday’s outcome was positive," said Sunil Jain, vice-president, equity research, Nirmal Bang. "The Indian markets are still range-bound and we expect the broader Nifty to reach anywhere between 5,500 to 5,600 within the next one month."
Consumer goods and auto stocks were the best performers with gains of 1.8% and 1.6%.
Snapping the downslide of the last four sessions, the rupee also recovered by 50 paise to settle at 55.39 against the US dollar on the back of strong capital inflows amid dollar sales by exporters.
"The biggest positive that helped the rupee gain was the euro zone agreeing on the terms for bailout of Spanish banks" said NS Venkatesh, treasury head, IDBI Bank.