Stocks of insurance companies and those with interests in the sector rose on Thursday on hopes that the Insurance Bill would likely be passed by the Rajya Sabha, raising the scope of foreign investments.
The Insurance Laws (Amendment) Bill was approved by the upper house of Parliament after the close of market hours.
Shares of Reliance Capital surged 10.9% to Rs 489.95 on the BSE. Max India rose 5.49% to Rs 488.20, while Aditya Birla Nuvo gained 3.62% to Rs 1,670.45.
Stocks of related companies such as ICICI Bank and SBI, which also own insurance businesses, posted strong gains. While ICICI rose 1.6% to Rs 338.10, SBI gained 0.7% to Rs 287.20.
This pushed the benchmark Sensex up 271 points, or 0.95% to 28,930.41 and the NSE Nifty rose 76.05 points, or 0.87%, to close at 8,776. The rupee also recovered from two-month lows and rebounded 28 paise to close at 62.50 against the US dollar.
The government had earlier promulgated an ordinance to raise the foreign direct investment limit in insurance to 49%, from the existing 26%. The Bill in this regard was passed by the Lok Sabha on March 4, 2014.
"We believe that the trigger for the markets will depend on the final outcome from the budget session," said Vinod Nair, head, fundamental research, Geojit BNP Paribas Financial Services.
Among Sensex stocks, Sesa Sterlite was the top gainer (up 3.63%), followed by NTPC (up 3.54%) and Hindalco (up 3.37%).
Sectorwise, the Bombay Stock Exchange power index gained the most by rising 2.27%, followed by realty (up 1.53%) and consumer durables (up 1.49%).
"The market was up mainly because of stable global cues and on the expectations of positive news flow on the front of Insurance Bill," said Shrikant Chouhan, head, technical research, Kotak Securities.