Sensex surges 333 points after Tuesday's rout

The BSE Sensex rose over 300 points while the Nifty rose 2 per cent on Wednesday on value buying in blue chip stocks after a fall of nearly 4 per cent on Tuesday was seen as overdone, while IT shares surged on improving business outlook.

Shares also tracked a sharp recovery in the rupee after suspected heavy dollar selling by the RBI prevented the battered currency from slipping to a record low.

However, analysts say volatility may persist as the country faces its worst economic crunch since a balance of payments crisis two decades ago amid rising conviction that the Federal Reserve will trim its stimulus and Washington is seen moving closer to a military strike on Syria.

"It's hard to predict which way the market can go as negative newsflow continues to come at even lower levels," said Deven Choksey, managing director at K R Choksey Securities.

The broader Nifty rose 2 per cent, or 106.65 points, to end at 5,448.10, closing above the psychologically important 5,400 level.

The benchmark BSE index rose 1.83 per cent, or 332.89 points, to end at 18,567.55.

Among recently beaten down blue chip shares, Reliance Industries gained 2.2 per cent while Tata Motors Ltd ended 4.9 per cent higher.

IT shares surged on improving business outlook and rupee depreciation, dealers said.

Tata Consultancy Services ended 3.4 per cent higher after earlier making its all-time high at 2,078.80 rupees while Infosys Ltd gained 2.6 per cent after earlier hitting a record high of 3,139.90 rupees

Bank shares rose on hopes that the central bank may unwind its liquidity tightening measures soon now that Raghuram Rajan, a former chief economist at the International Monetary Fund (IMF), takes charge of affairs.

In a reminder of the uphill task he faces, a report on Wednesday showed that activity in India's services sector shrank in August for the second straight month for its lowest reading in four years.

ICICI Bank Ltd rose 4.4 per cent and Axis Bank Ltd ended 2.4 per cent higher.

Jet Airways (India) Ltd ended 5.7 per cent higher as India's cabinet approved an accord with the United Arab Emirates to nearly quadruple airline seats between the two countries over three years.

The stock has risen 12.1 per cent in three consecutive session of gains following Etihad Airways' comments on Sunday that it expected its investment in the Indian carrier to be cleared by Indian authorities "imminently".

Ipca Laboratories Ltd shares surged 7.6 per cent after the company said in a statement that U.S. Food and Drug administration found its oral solid dosage formulations manufacturing facility in Pithampur 'acceptable'.

However, among decliners, real estate companies fell after the Reserve Bank of India said late on Tuesday that housing loans from banks to individuals should be closely linked to the stages of construction.

DLF Ltd fell 0.6 per cent, Indiabulls Real Estate Ltd ended 0.1 per cent lower.

Copyright Thomson Reuters 2013