The S&P BSE Sensex and NSE Nifty 50 indexes rose for second day in a row led by gains in heavyweights like Kotak Mahindra Bank, HDFC, ICICI Bank, Axis Bank and Larsen & Toubro. The benchmarks opened lower but soon reversed direction on the back of a broad-based buying interest. The Sensex rose as much as 421 points from day's lowest level to touch an intraday high of 41,697.03 and the NSE Nifty 50 index touched an intraday high of 12,272.
The Sensex ended 227 points or 0.55 per cent higher at 41,613 and the Nifty 50 index climbed 68 points or 0.56 per cent to settle at 12,248.
Analysts say the markets are likely to remain volatile until the government presents the Union Budget on February 1, when it may also unveil more measures to lift growth.
All sector gauges barring the Nifty Pharma index ended higher led by the Nifty Media index's 1 per cent gain. Nifty Financial Services, Nifty Bank, Nifty Private Bank, Nifty FMCG and Nifty Metal indexes also rose between 0.75-1 per cent each.
Mid- and small-cap shares outperformed their larger peers as the Nifty Midcap 100 and Nifty Smallcap 100 indexes rose nearly 1 per cent each.
Yes Bank was top gainer in the Nifty 50 basket of shares, the stock rose 3.9 per cent to close at Rs 42.55. UltraTech Cement, Britannia Industries, Tech Mahindra, Axis Bank, Titan, Kotak Mahindra Bank, Coal India, HCL Technologies and JSW Steel were also among the gainers.
On the flipside, Power Grid, Cipla, IndusInd Bank, Tata Motors, Bharat Petroleum, Sun Pharma and Adani Ports were among the laggards.
The overall market breadth was positive as 1,390 shares ended higher while 1,138 closed lower on the BSE.