India's largest gas distributor GAIL rose 2.97 per cent to end the day as the biggest Sensex gainer. Cigarette major ITC recorded a smart gain of 2.07 per cent.
IT stocks continued its winning streak for the second day. Wipro rose 1.38 per cent to trade at its 52-week high level. Infosys was up 0.56 per cent.
Brokers attributed the rally to short coverings by operators because February series of Futures and Options was expiring today.
"IT stocks continued to see buying interest, with Wipro making its 52-week high level. FIIs continued to show optimism in the Indian stock market and were net buyers, particularly for last two weeks, and this also boosted market sentiment," said Rakesh Goyal, Senior Vice President, Bonanza Portfolio.
Foreign institutional investors (FIIs) bought shares worth a net Rs 423.41 crore yesterday, as per provisional data from stock exchanges.
The 30-share barometer resumed the day stable. It touched intra-day high of 21,005.04 but lost a little momentum and end at 20,986.99, a rise of 134.52 points from its last close.
In straight four sessions, Sensex has surged by 450.35 points or 2.19 per cent.
The previous time the key index breached 21,000-level was on January 24, 2014, when it closed the day at 21,333 points.The 50-issue Nifty on NSE also improved further by 38.75 points to 6,238.80.
Other major Sensex gainers were M&M 2.00 per cent, Dr Reddy's Lab 1.77 per cent, BHEL 1.63 per cent, Sun Pharma 1.33 per cent, Hero Motocorp 1.25 per cent, Bajaj Auto 1.09 per cent.
Tata Steel plunged 3.23 per cent, SSLT 2.62 per cent, Tata Power 1.85 per cent and Coal India 1.12 per cent.
Markets traded range-bound for the better part of the day and were a bit cautious with thin volumes as the February series of F&O expired today, said Jignesh Chaudhary, Head Of Research, Veracity Broking Services.
"There were some positive rallies seen in consumer durables, power, banks and healthcare stock, which helped the Sensex to trade in the green zone. Moreover a positive buying spree form the FII community also helped keep up the positive momentum," he added.
Overall, 10 out of 12 sectoral indices closed in the green. Of 30 sensex-based scrips, 22 finished with gains. Among sectoral indices, FMCG rose by 0.99 per cent, consumer goods 0.94 per cent, auto 0.86 per cent, healthcare 0.82 per cent and Bankex 0.56 per cent.
Market breadth turned positive as 1,357 ended higher, while 1,339 finished lower and 145 ruled steady. Asian stocks ended mixed between gains and losses as energy shares advanced, countering decline in raw material producers. Key benchmark indices in China, Hong Kong, South Korea and Taiwan rose by 0.29-0.54 per cent. Indices in Singapore and Japan fell by 0.50-0.54 per cent.
European stocks were trading lower. Key indices in France, Germany and UK eased by 0.18-0.37 per cent.
Sahaj Agrawal, Deputy Vice President- Derivatives Research, Kotak Securities
Markets witnessed significant volatility in the February series. Every correction got bought into led by an up-move in the index. Private banks outperformed while PSU segment consolidated. CNX IT, Capital goods did well while the metal space underperformed. Considering the rollover into the March series we expect upsides to be limited. Selling pressure can be expected around 6300-6350 levels. On the downside strong support is seen at 6100 levels below which 5950 can be tested. For the medium term we remain positive on the market and advice accumulation of select stocks.
Indian shares end at near five-week high on heavy foreign buying
(Reuters) Indian shares rose for a fourth straight session on Wednesday to close at their highest in more than a month as blue chips such as ITC Ltd rose on heavy buying by foreign investors despite expectations of volatility due to derivatives expiry.
Overseas investors have been net buyers of cash shares in each of the previous nine sessions, with inflows totalling $533.2 million, exchange and regulatory data showed, calming worries about the U.S. Federal Reserve's stimulus tapering and a slowdown in China.
Also boosting sentiment was foreign buying of index futures and options on Tuesday, worth 21.51 billion rupees ($347 million), a rare event one day ahead of the expiry of derivative contracts. Financial markets in India will remain closed on Thursday for a local holiday.
Traders will continue to monitor moves in other regional markets for near-term direction, ahead of December-quarter economic growth data due to be released after market close on Friday.
"FIIs flows are driving the market and may even overshadow GDP data. We are positive about the market for the month of March and are seeing a pre-election rally taking shape," said Vinod Nair, head of fundamental research at Geojit BNP Paribas Financial Services.
India's economic growth likely slowed to a near decade-low of 4.9 percent at the end of last year as high interest rates hit factory activity, according to economists polled by Reuters who don't expect a pickup in investment before elections in May.
The benchmark BSE index rose 0.65 percent, or 134.52 points, to end at 20,986.99.
The broader NSE index rose 0.62 percent, or 38.75 points, to end at 6,238.80. It closed above the psychologically important 6,200 level for the second day. Both the indexes marked their highest close since Jan. 24 for a third consecutive day.
India's National Stock Exchange on Wednesday launched trading of futures <0#NVIXW:> tied to its VIX volatility index , known as the "fear gauge," providing a key hedging tool against uncertainty ahead of general elections and weaker global market sentiment.
Trading was active with 3.25 billion rupees ($52.4 million) worth of turnover, the NSE website showed.
India's regional parties met on Tuesday to declare a political alternative to the two main national parties, the ruling Congress and the main opposition BJP, ahead of national elections due by May.
Cigarette-maker ITC Ltd rose 2.1 percent, while Sun Pharmaceutical Industries Ltd gained 1.5 percent. Among other blue chip stocks, HDFC Bank rose 0.9 percent, while Mahindra and Mahindra Ltd ended 2.2 percent higher.
The NSE software index ended 0.37 percent higher after earlier marking its all-time high at 10,212.60, rising for a second straight day on continued optimism about U.S. business outlook.
Wipro Ltd gained 1.1 percent, while Infosys Ltd rose 0.7 percent.
Dr. Reddy's Laboratories Ltd rose 2.3 percent after earlier marking its record high of 2,849.40 rupees on growing hopes about its U.S. business. The drugmaker also said late on Tuesday it launched Sumatriptan injection, used to treat migraine, for U.S. markets.
However, L&T Finance Holdings fell 2.8 percent on profit-taking after gaining 3.9 percent on Tuesday on expectations it was a leading contender for a banking licence.
* BSE index gains 0.65 pct; NSE ends 0.62 pct higher
* Dr. Reddy's hits record high on migraine drug launch in US
* NSE IT index makes all-time high
* India's NSE launches VIX futures as election jitters grow
FACTORS TO WATCH
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* Brent holds above $109
* Asia shares sluggish, some calm returns to China * Foreign institutional investor flows