The benchmark Sensex on Tuesday rose by nearly 160 points amid a rise in global stocks, which were bolstered by two major acquisitions in the pharma and IT space in the US.
After surging over 200 points in the opening trade after a three-day weekend, the Bombay Stock Exchange 30-share index shed some of the gains to close at 16,852.91 points, higher 159.91 points or 0.96 per cent from its previous close.
IT and healthcare stocks counters saw hectic buying encouraged by two acquisitions in the US, pushing the sectoral indices by 2.26 per cent and 1.63 per cent respectively.
In a $ 6.6-billion deal, US healthcare company Abbott Laboratories will buy pharma business of Solvay Group.
Xerox Corp is acquiring outsourcing entity Affiliated Computer for about $ 6.4 billion in a cash and stock deal.
The broader 50-issue Nifty of the National Stock Exchange rose by 47.90 points to 5,006.85 points.
Marketmen said two big acquisitions in the US involving a mammoth $ 13 billion infused a strong confidence in foreign investors. They added that investors were also encouraged by domestic factors like a robust growth in six core sectors and excise collections for August.
Six core industries -- cement, electricity, coal, steel, crude oil and petroleum refinery products- grew by over 7 per cent in August, which is widely seen as another indication that economy is recovering gradually. Excise duty collections jumped by 22.7 per cent in August.