The benchmark indices of both the major stock exchanges, BSE and NSE, closed with handsome gains. The Sensex gained 93 points while the S&P CNX Nifty gained 28 points. The Sensex gained more than 150 points in the last two days.

Speaking to The Financial Express, icicidirect.com chief operating officer Anup Bagchi said, "With the markets gaining strengths on Wednesday, it seems that liquidity is improving on the bourses. As the liquidity positions have improved, it has given an opportunity for bargain hunting, particularly to institutional investors. With huge buying by both domestic and foreign investors, the confidence is stabilising in the market."

The Sensex opened with a positive gap of about 40 points at 3736.54, which happened to be the day's lowest level and surged ahead to reach a high of 3792.76 before attracting minor profit-booking, which took the Sensex down to close at 3788.21, a gain of 93.39 points. Nifty closed at 1206.20 as compared to Tuesday's close of 1177.75, gaining 28.45 points.

According to market sources, foreign institutional investors (FIIs), who were active in the markets throughout the month of March, picked up sizeable lots of new economy and pharma sector stocks on Wednesday. Trading turnover at both the exchanges also improved a lot with the BSE registering a turnover of Rs 1,227 crore.

According to Khandwala Securities chief dealer Devang Dhruv, the market should stabilise at around the 4000-mark. The marketmen are not anticipating a long bull run. The expectations of the market stabilising is also getting more strength as world markets, including Nasdaq, are signalling an end to the further downslide.

Across the board buying saw NIIT stock hitting the upper circuit and closed the day with a gain of 10.51 per cent at Rs 796.50. Dr Reddy also topped the gainers list by rising 5.61 per cent to close at Rs 1293.10 after the company's announcement of filing documents for an ADS issue. FMCG major HLL gained 4.82 per cent on the back of valued buying to close at Rs 220.20.

Mr Bagchi said one more reason for the change in the market trend could be the inevitable sword of political uncertainty which was hanging after the Tehelka tapes controversy broke out, has calmed down and temporarily the instability at the Centre has been kept in abeyance.