Mumbai:A day after it fell by 238 points on the back of disappointing quarterly results, a barometer index of the Indian equity markets gained 333 points during the late-afternoon trade session on Wednesday.
Investor sentiment was buoyed after positive statements were made by the government which indicated political willingness to resolve the impasse on crucial legislations like the goods and services tax (GST) and land bill.
Investors also seemed to be willing to make value purchases after Tuesday's price fall.
The barometer 30-scrip sensitive index (Sensex) of the S&P Bombay Stock Exchange (BSE) was trading at 333.05 points or 1.18 percent up during the session under review.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) also made gains and was trading 99.90 points or 1.17 percent up at 8,629.35 points.
The S&P BSE Sensex, which opened at 28,159.42 points, was trading at 28,515.19 points (2.45 p.m.), up 333.05 points or 1.18 percent from the previous day's close at 28,182.14 points.
The Sensex so far touched a high of 28,538.43 points and a low of 28,070.91 points in the intra-day trade.
"Investor confidence was boosted after positive statements were made by the government and the principal opposition party on the possibility to find a way to clear the GST," Anand James, co-head, technical research, Geojit BNP Paribas, told IANS.
"The prime minister's assurance that states will be given autonomy to craft changes in their own version of land bill gave hope about its passage. Expectation that parliament will be able to clear these two legislations in the monsoon session has added positive sentiments."
James pointed-out that other major triggers to focus at will be the Justice A.P. Shah panel's report on MAT (minimum alternate tax), expected to be submitted some time next week.
"Foreign portfolio investors (FPIs) inflows might be impacted due to the MAT issue. The FPIs have been consistent net buyers in the Indian markets since July 13," James added.
The MAT issue on capital gains is expected to impact the margins of foreign funds.
According to Sanjeev Zarbade, vice president of Kotak Securities, the markets were also awaiting the release of housing and the non-farm payroll data in the US.
These data points are significant as they show recovery in the US economy based on which the US Fed will decide whether to raise interest rates or not.
"The US Fed had said they will raise rates in the later part of 2015, depending on the data points. Thus the upcoming US Fed's FOMC (Federal Open Market Committee) meet will give further clues as to when the rate hike might take place," Zarbade told IANS.
With higher interest rates in the US, the FPIs are expected to be led away from emerging markets such as India.
The FOMC meet is scheduled for July 29, following which the future and options (F&O) expiry will take place in the Indian equity markets.
Sector-wise, healthy buying took place in interest rate sensitive stocks like bank, automobile, oil and gas, healthcare and capital goods.
However, IT and technology, entertainment and media (TECK) scrip came under intense selling pressure.
The S&P BSE bank index zoomed by 343.66 points, automobile index jumped by 226.14 points, oil and gas index rose by 217.16 points, healthcare index gained 139.66 points and capital goods index was up 113.36 points.
The BSE S&P IT index declined by 51 points and TECK index was lower by 23.47 points.
