The benchmark Sensex shrugged off inflation concerns and gained for the first time in eight days, advancing 205 points as overseas stocks rose on indications the US Fed will continue its stimulus programme.
Auto, bank and realty sector stocks, which are sensitive to interest rates, made the biggest gains after the Reserve Bank of India announced fresh steps to increase liquidity. ICICI Bank and Tata Motors boosted the Sensex.
The 30-share S&P BSE Sensex opened on a strong note and touched a high of 20,568.99. It came off after inflation data was released. It ended at 20,399.42, a rise of 205.02 points or 1.02%. In the previous seven sessions, Sensex had tanked 1,044.96 points or 4.92%. The broader CNX Nifty on the National Stock Exchange rose 66.55 points, or 1.11%, to 6,056.15. The SX40 on the MCX Stock Exchange ended at 12,119.39, up 117.27 points.
Asian and European stocks moved up after Janet Yellen, nominated by president Barack Obama to lead the Fed, indicated the stimulus programme would continue. Yellen said the US economy has farther to go to regain lost ground, according to a statement on the Fed website.
"A strong recovery will ultimately enable the Fed to reduce its monetary accommodation and reliance on unconventional policy tools," Yellen said.
Wholesale inflation picked up pace to 7% in October from 6.46% in September, the government said. RBI governor Raghuram Rajan, who has increased a key rate twice since taking over on September 4, said yesterday food inflation was "worryingly high" and the price situation would improve once the impact of new crops is felt on the market.