Bolstered by finance minister's statements, the Sensex on Tuesday surged by nearly 189 points to 17,601.78, its highest level since July 10, with investors buying shares in banking, auto, realty and IT sector amid a firming overseas trend.
The BSE benchmark index, which had gained 215 points in the previous session, spurted by 188.82 points or 1.08 per. This is second straight day that Sensex has gained 1%.
Brokers said market participants cheered finance minister P Chidambaram's positive intent as he yesterday promised fine-tuning of policies, employing corrective steps to put in place a stable and non-adversarial tax regime.
Interest-rate sensitive stocks including banks, realty and auto shares went up as investors are hoping for possible interest rate cut, they added. All sectoral indices closed higher, barring Oil& Gas and Consumer Durables. Investor welath swelled by over Rs 40,000 crore to Rs 61.75 lakh crore.
"The market is expecting substantial reform measures by the government in the Parliament session commencing from tomorrow. It is also speculating possible rate cuts in near future," said Nidhi Sarswat, senior research analyst, Bonanza Portfolio.
Tata Motors, which rose 4.4%, led gainers in 30-share Sensex, followed by GAIL, Bajaj Auto and ICICI Bank.
The 50-share National Stock Exchange index Nifty surged by 54.15 points, or 1.03% to 5,336.70.
IT stocks including Infosys and Wipro rose after US-listed Cognizant's stellar second quarter earnings and full-year revenue guidance boosted the sector's sentiment, said traders.
Globally, Asian stocks finished modestly higher, extending gains from the previous session amid renewed optimism that the European Central Bank will take action to alleviate the Eurozone's debt crisis.