The Sensex and Nifty rose more than 1 per cent on Wednesday, recovering from earlier falls to post their biggest single-day percentage gain since July 10, reflecting upbeat mood across global markets ahead of minutes of the US Federal Reserve's latest meeting.
The benchmark BSE index closed higher by 321.86 points or 1.02 per cent at 31,770.89, recovering from an earlier fall of as much as 0.16 per cent to gain for a second consecutive session.
The broader NSE index ended up by 103.15 points or 1.05 per cent at 9,897.30, rebounding from an earlier decline of as much as 0.21 per cent.
Among BSE sectoral indices, FMCG index gained the most by 2.94 per cent, followed by metal 1.72 per cent, auto 1.62 per cent and banking 1.26 per cent, while infrastructure index was down 0.18 per cent and capital goods 0.13 per cent.
Top five Sensex gainers were Tata Motors (+3.57%), Cipla (+3.54%), ITC (+3.01%), HUL (+3.00%) and Sun Pharma (+2.69%), while the major losers were NTPC (-1.05%), Asian Paints (-0.94%), Power Grid (-0.81%), Cipla (-0.67%) and Lupin (-0.56%).
Brokers said sentiment remained upbeat on the back of persistent buying by domestic institutional investors (DIIs) even as retail inflation jumped to 2.36 per cent in July.
Wholesale inflation too rose sharply to 1.88 per cent in July — first rise in five months — as some food articles turned dearer even as the industry pitched for cut in interest rates citing weak industrial activity.
Brokers also said a firm trend in other Asian markets as fears receded over a potential clash between the US and North Korea and overnight gains at Wall Street also influenced the trading sentiment here.
US-North Korea tensions
Since hitting an all-time high on August 2, India's broader NSE index has fallen more than 3 per cent on profit-taking as well as a flare-up in tensions between the United States and North Korea.
“There is complete lack of triggers, all the movement has been on geopolitical situation till now,” said Jayant Manglik, president, retail distribution, Religare Securities.
Asian shares
The dollar hoarded hefty gains on Wednesday after strong US retail data put a Federal Reserve rate hike back on the agenda, while Asian stocks inched ahead as tensions in the Korean peninsula simmered down a little.
North Korean leader Kim Jong Un has delayed a decision on firing missiles towards Guam while he waits to see what the United States does, as Washington said any dialogue was up to Kim.
MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.1 per cent, while Japan's Nikkei dithered either side of flat.