Expectations of a rate cut, coupled with budgetary announcements and positive Asian cues, buoyed the Indian equity markets during the late - afternoon trade session on Tuesday.
Consequently, the barometer 30 - scrip Sensitive Index (Sensex) of the Bombay Stock Exchange (BSE) rocketed by 717 points or 3. 12 percent.
Similarly, the wider 50 - scrip Nifty of the National Stock Exchange (NSE), made healthy gains. It augmented by 218. 20 points, or 3. 12 percent, to 7, 205. 25 points.
The Sensex, which opened at 23, 153. 32 points, traded at 23, 719. 04 points (at 2. 45 p. m. ) - - up 717. 04 points or 3. 12 percent from its previous day's close at 23, 002 points.
During the intra - day trade, the Sensex touched a high of 23, 751. 91 points and a low of 23, 133. 18 points.
The BSE market breadth was heavily tilted in favour of bulls - - with 1, 903 advances and 573 declines.
Initially, both the key indices of the Indian equity markets opened on a positive note, in - sync with their Asian peers and expectations of a future rate cute.
Short - coverings were triggered by heightened chances of a future rate cut by the Reserve Bank of India (RBI).
This pushed prices higher, as investors expect the Union Budget's fiscal prudence measures will give room to the RBI to further ease its monetary policy.
Presenting the Union Budget, Finance Minister Arun Jaitley on Monday announced that the government will adhere to a 3. 9 percent fiscal deficit target. He also set a 3. 5 percent target for the next fiscal.
Further, value - buying was witnessed at low levels. Buying in large caps like ITC, ICICI Bank, Hero MotoCorp and Maruti Suzuki lifted equity markets higher.
Even positive macro - data that showed acceleration in India's manufacturing activity in February supported the equity markets upward movement.
The monthly Nikkei's Purchasing Managers Index (PMI) data reported a 51. 1 uptrend in February. An index reading above 50 indicates an overall increase on the index.
Besides, investors' confidence was restored after the central government announced increase in capital expenditure on rural sector, infrastructure development, crop insurance, agricultural credit, skill enhancement and start - up initiative.
In addition, bullish crude oil prices which rose by 1. 2 percent to $34 per barrel, led investors from chasing stock prices higher.
Moreover, a strengthening rupee cheered investors sentiments. It opened at 68. 27 to a US dollar from its previous close of 68. 42 to a greenback.
"Indian rupee cheered a constructive Union Budget, where government has struck a balance between fiscal consolidation and structural needs of the rural economy, " Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities, told IANS.
"A sharp rally in bond prices have had a knock - on effect on rupee, which appreciated by 46 paise, towards 67. 98 levels on spot. "
According to Anand James, co - head, technical research desk with Geojit BNP Paribas Financial Services, investors expect a RBI rate cut as a result of the government's commitment towards fiscal deficit targets.
"Hopes of macro stability after the Union Budget have restored the risk taking appetite of investors. Investors expect RBI to go in for a rate cut, due to government's focus to stay on the fiscal deficit path, " James told IANS.
Vaibhav Agarwal, vice president and research head at Angel Broking, elaborated that markets traded sharply higher led by positive Asian cues.
"Markets are trading sharply higher led by positive Asian cues after China decided to lower the reserve requirement ratio (RRR), injecting $100 billion of cash in the economy, " Agarwal noted.
"Markets are trading in a range and we expect markets to consolidate at current levels before any strong move. "