Mumbai, July 2: Harried investors today heaved a sigh of relief when shares overcame the bear grip to post a strong rally. The 30-share sensex soared nearly 703 points, its biggest single-day gain in over three months to close at 13664.62.

Broking circles said today’s relief rally was not surprising given that stocks were oversold.

This was reflected in the strong comeback staged by realty and banking stocks after they were hammered in the past three days.

These two sectors had bore the brunt of investor selling on worries over high interest rates.

The benchmark index, which opened marginally weak at 12948.05, showed some volatility initially. However, the sentiment perked up after noon. The sensex hit an intra-day high of 13712.31 and later closed at 13664.62, a gain of 5.42 per cent.

Brokers said apart from bargain buying by investors, strong indications of a possible solution to the ongoing political uncertainty also aided the buying. Positive cues from other stock markets improved the sentiment.

Analysts, however, remain cautious. They feel the economic and political factors controlling the movement of stocks continue to be challenging.

“Today’s was a technical bounce-back. Though the markets have made a key reversal, one has to wait till the next week to see if today’s rally is sustained,” said Arun Kejriwal at KRIS.

Another observer at a domestic brokerage said the markets would continue to be under pressure till crude oil prices stopped rising.

“Only if crude oil prices were to cool down to $135 levels, could we see this rally being sustained,” the analyst added.

A key highlight of the day’s trade was the sharp reversal in realty stocks. The BSE realty index led the gainers’ list with a rise of 12 per cent. It was followed by the banking index which rose by a little over 6 per cent.

The surge in realty index was led by DLF, which rose 15 per cent on the announcement of its buyback.

ICICI Bank and HDFC Bank rose nearly 5.7 per cent, while the State Bank of India also ruled strong.

Reliance Industries Ltd, too, gained nearly 5 per cent to Rs 2,143.10.

Another big loser in the last two days, Reliance Infra structure, today jumped 12.6 per cent, while the ONGC scrip closed 8.12 per cent higher. Larsen & Toubro, closing at 7.33 per cent, was the fifth biggest gainer on the Bombay Stock Exchange.

The 50-share Nifty on the National Stock Exchange also scored an impressive gain of 196.60 points, or 5.05 per cent, to close at 4093.35.

Rupee rally

The rupee gained 18 paise at 43.17 against the greenback to snap its three-day losing streak as stock markets surged giving hopes of capital inflows, a key driver of the local currency.

High global oil prices, which traded above $141-per-barrel in the Asian markets, however, continued to put downward pressure on the domestic currency.

The value of the rupee had eroded 65 paise, or 1.52 per cent, taking it to a 15-month low of 43.34 a dollar in the last three days.