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The benchmark indices finished higher on Thursday, led by gains in financial and energy stocks on hopes that a fall in oil prices due to the Iran nuclear deal will lower import costs and interest rates.
The Sensex ended at 28,446.12, up 247.83 points or 0.88 per cent. The NSE Nifty finished at 8,608.05, up 84.25 points or 0.99 per cent.
Oil prices rose on Thursday, but the US and Brent prices are down more than 17 and 15 per cent respectively from their June peaks on oversupply, even as the market expects a gradual return of Iranian exports from 2016 to further reduce prices.
Bank stocks jumped after Jaitley said Cabinet has cleared policy for composite foreign investment limits by including FDI, FII and other routes.
Investors also look towards the monsoon session of parliament next week where key proposals including land acquisition and national tax reforms are expected to be debated.
Next week's parliament session is expected to be volatile, with political scandals likely to disrupt proceedings and put land, labour and tax reform bills on the back burner.
Gains also tracked higher global shares after volatile Chinese stocks reversed course and rose, while the dollar stood tall after Federal Reserve Chair Janet Yellen reinforced expectations for a US rate hike. European stocks hit a six-week high in opening trade.
"The government is facing rough winds on key land acquisition bill, which is definitely a concern," said Deven Choksey, managing director at K R Choksey Securities.
Kotak Bank (4.17%), Axis Bank (4.16%), Yes Bank (3.15%), BHEL (2.85%) and BPCL (2.54%) were the top Nifty gainers.
Housing Development Finance Corp gained 1.3 per cent and HDFC Bank rose 1.7 per cent.
Meanwhile, oil refiners such as Reliance Industries rose 1.1 per cent, Tata Power 2.36 per cent, IOC 2.15 per cent.
State-run coal miner Coal India rose 0.22 per cent.
Among specific stocks, shares of South Indian Bank slumped 5.33 per cent following dismal April-June earnings, which were released post market hours on Wednesday.
MindTree shares gained 0.22 per cent.
Pipavav Defence and Offshore Engineering shares surged 3.57 per cent on reports that the company may secure a $3 billion order from the Russian government.
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