investors continued to cheer the interim budget proposals.
The Sensex, which had gained 271 points in the previous two sessions, rose further by 170.15 points, or 0.83 per cent, to close at 20,634.21 -- the highest level since January 29. Axis Bank, HDFC Bank, ICICI Bank and Maruti Suzuki India led the 21 gainers in 30-share Sensex. GAIL and ITC were among laggards.
The NSE Nifty rose 53.80 points, or 0.89 per cent, to close at 6,127.10.
"While announcing the Interim Budget, the Finance Minister stated government will contain the fiscal deficit at 4.6 per cent of GDP. This has boosted investor confidence and buying interest was seen. Excise duty cuts in sectors such as Auto and Capital Goods also led to renewed buying," said Rakesh Goyal, Senior Vice President, Bonanza Portfolio.
Banking stocks lead the upsurge on rising hopes that improving economic growth would boost lending business, brokers said.
Global rating agency Moody's has said India's interim budget is in line with the policy assumptions that underpin its 'Baa3' rating with a stable outlook.
Sectorally, the BSE Banking sector index gained the most by rising 2.34 per cent, followed by Capital Goods (2.09 per cent), Power (1.73 per cent), Metal (1.03 per cent) and Auto (0.96 per cent). Overall, eight indices gained, three fell and TECK index closed flat.
BSE Sensex closes higher; banks, metals share prices lead with gains
BSE Sensex rose to a near three-week closing high on Tuesday, with banks extending gains on the government's budget commitment to maintaining the fiscal deficit, while firm global prices lifted metal stocks.
TheBSE Sensex provisionally closed 0.71 percent higher at 20,609.53 points while the broader NSE Nifty provisionally gained 0.76 percent at 6,119.35 points.
The gains were also supported by strong buying by overseas investors, who bought Indian stocks worth 5.22 billion rupees ($84.28 million) on Monday.
On Monday, while unveiling the interim budget finance minister P Chidambaram announced a number of pro-industry measures including excise duty cuts on vehicles, capital goods products and mobile handsets.
Among sectoral indices, the BSE Bankex gained 2.70%, BSE Capital Goods (1.64%) and BSE Metal (1.29%) were among the major gainers on Tuesday. Among individual stocks, Axis Bank (4.81%), ICICI Bank (3.30%) and Housing Development Finance Corporation (2.90%) were the major gainers.
Asian markets showed a mixed trend. The Nikkei was trading 3.13% higher as the Bank of Japan decided to continue with its stimulus package on Tuesday. The Hang Seng (0.23%), KOSPI (0.03%) and Taiwan Taiex (0.43%) were trading in the green. The Jakarta Composite (-0.02%) and Shanghai Composite (-0.77%) were trading in the red.
Experts expect markets to remain range-bound. Nifty may trade within a range of 6000 6150. We expect technical pullback from the current level and Nifty may touch 6100, Standard Chartered said in a note.