Mumbai, Sept. 27: Tuesday brought some relief to the harried investor as firm global markets and reports that the government might cut securities transaction tax (STT) saw the BSE Sensex stage a spectacular rally.
The key index rose nearly 473 points to 16524.03 — its third biggest gain this fiscal — while the Nifty of the National Stock Exchange (NSE) gained nearly 136 points.
The Sensex had slumped over 1048 points in the last four trading sessions on global cues.
Today, stocks swayed in the opposite direction as there were reports that Europe was looking at measures to solve its debt crisis.
European policymakers were working towards increasing the strength of the regions bailout fund.
This development had helped US stocks to rebound on Monday, and the Dow Jones Industrial Average rose over 272 points.
Asian stocks were in the positive territory today; key European indices also rallied, resulting in the benchmark index opening up at 16289.32.
Since then, it refused to look back and built on the gains.
The index later hit an intra-day peak of 16551.65 on strong cues from the European markets even as short-covering pulled it back and it closed the day at 16524.03, a rise of 472.93 points, or 2.95 per cent.
In Asia, key indices from Hong Kong, Japan, Singapore, South Korea and Taiwan closed higher between 1 per cent to over 5 per cent while in Europe, the CAC, DAX and FTSE were up between 2.2 per cent and 3.2 per cent.
Across-the-board buying saw beaten down sectors capturing investor attention.
Sensex heavyweights such as Reliance Industries, Infosys, ICICI Bank, ITC rose.
Sectorally, the realty, IT, refinery, banking and auto counters gained the most.
DLF was the top gainer in the Sensex pack with a rise of 8.46 per cent; other major gainers were Hindustan Unilever, Mahindra & Mahindra and Bhel.
Analysts said trends in Europe would dictate sentiments.
A rally is likely this week, but it will get reversed if the European policy makers fail to solve the debt crisis.
The rally in stocks was good news for the rupee, which gained 38 paise to close at 49.08 against the dollar.
The US greenback weakened against major currencies even as there were fresh supplies from banks and exporters.
At the Interbank Foreign Exchange (Forex) market, the rupee opened strong at 49.18 a dollar from the previous close of 49.46. It fell back to a low of 49.30 and as supply improved, it recovered sharply to a high of 49.06 before ending at 49.08.