Sensex rises 385 points, Nifty ends above 5900
The Sensex jumped nearly 2 per cent and the Nifty rose more than 2 per cent on Thursday to its highest close in nearly two weeks as software services exporters gained on bets for an improving business outlook in key markets, while banks surged on potential gains from falling bond yields.
Indian shares also tracked gains in regional peers, partly boosted by an upbeat survey on China's huge services sector.
Earlier in the day, the Nifty got a temporary boost after its October futures contract spiked as much as 2.87 per cent in what multiple traders described as a "freak", or erroneous, trade.
Investors are now gearing up for the September-quarter earnings season with Infosys reporting its results on October 11.
"Management commentary and signs of green shoots in the earnings season would be more important than the actual earnings, which are more or less expected to be a whitewash this time," said Phani Sekhar, fund manager of portfolio management services at Angel Broking.
The Nifty rose 2.24 per cent, or 129.65 points, to 5,909.70, closing above the psychologically important 5,900 level and rising for a second day. Markets were closed on Wednesday for a national holiday.
The Sensex advanced 1.97 per cent, or 384.92 points, to 19,902.07.
Shares in software exporters gained after brokers said the sector was facing rising demand from the United States and Europe.
Tata Consultancy Services Ltd rose 3.9 per cent, while Tech Mahindra Ltd gained 3.6 per cent and Wipro Ltd advanced 2.8 per cent.
Banking stocks continued to track gains in bonds after the apex bank said it would buy bonds worth up to Rs 10,000 crore via open market operations on October 7.
Lenders are the biggest holders of government bonds and the Reserve Bank of India's rate hike last month had raised concerns about the holdings.
Axis Bank surged 5.8 per cent and HDFC Bank Ltd gained 4 per cent.
Among state-owned banks, State bank of India Ltd rose 1 per cent, while Bank of Baroda Ltd gained 5.3 per cent.
Among midcap banks, Yes Bank Ltd surged 5.3 per cent.
Bajaj Auto Ltd surged 4.9 per cent after its sales for September came higher than expectations, dealers said.
Tata Communications rose 4.2 per cent after HSBC upgraded the stock to 'overweight' from 'neutral' and raised its target price to Rs 233 from Rs 180, citing a potential takeover of unit Neotel.
However, among stocks that fell, Hindustan Unilever fell 1.5 per cent, adding to Tuesday's 1.3 per cent decline after the parent company Unilever warned that a slowdown in its emerging markets accelerated in the third quarter.