Mumbai, April 3: The new financial year began on an exhilarating note for the equity market as a rush of foreign funds and heavy mutual fund investment pushed the sensex up 284 points.

The liquidity rush, triggered by expectations of robust fourth-quarter earnings by corporate India, led to the market barometer breaching the 11500-mark to end at a new closing peak of 11564.36.

This is the largest single- session rise since May 18, 2004, when the key BSE index gained by 371.86 points. Observers add it is also the largest intra-day gain for the index during the past decade.

Morning shows the day, but not for the BSE index, which opened at 11342.96, a modest gain of 63 points. Brokers had no clue that the index would touch such stunning heights later in the day.

Brokers said the index did breach the 11400 level in early morning trades, only to drift back a bit. It later regained momentum as consistent buying continued. It was towards the last couple of hours that a sudden spike helped the index pass the psychological barrier of 11500.

After hitting a new intra-day high of 11579.10, 15 minutes before close, the index ended the day at 11564.36 against Friday's close of 11279.96, a net rise of 284.40 points or 2.52 per cent.

“Both foreign investors and mutual funds were highly active today. It is the liquidity from these two quarters which led to the strong rise. The money is coming as these participants are confident of the India growth story. Moreover, a good set of corporate results is on the anvil,” a broker pointed out.

According to Sebi figures, FIIs made net investment of Rs 6,688.80 crore ($1.50 billion) for the month of March. This took their total investment so far this calendar year to $4 billion or Rs 17,954 crore. Mutual funds have also invested close to Rs 5000 crore into equities in March. It is estimated that mutual funds made purchases of Rs 500 crore in various counters today.

“It is liquidity which has become the prime factor now. There is more than $20 billion flowing into emerging markets. For India, this liquidity will continue to be positive,” said Andrew Holland of DSP Merrill Lynch.

However, with the equity market now at new highs, there are a few observers who advise caution to retail investors from taking fresh positions at this stage.

“The current rise is based on the expectation that corporate results will be good. However, there could be a huge correction if companies fail to meet the lofty expectations,” an analyst with a local brokerage added.

While today's surge was led by heavyweights like Reliance and Infosys, the rally was widespread. Even mid-caps and small-caps ended in the positive territory.