The benchmark indices extended gains for the third straight session on Tuesday, posting their highest close in more than five months, led by financials such as Housing Development Finance Corp (HDFC) and energy stocks including Reliance Industries.

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The Sensex ended at 36,239, up 304.90 points, while the broader Nifty50 settled at 10,947, up 94.35 points. Both the indices remained above their key levels of 36,000 and 10,900 throughout the session, indicating robust investor optimism after a prolonged lacklustre spell. 

In the broader market the BSE Midcap and the BSE Smallcap indices added 1 per cent each.

Market breadth, indicating the overall health of the market, remained positive. On the BSE, 1,670 stocks rallied, 966 stocks declined, while 140 stocks remained unchanged.

"Market rallied to a five month high as fading trade war woes and shift in attention to corporate earnings supported investor’s sentiment. Any revival in earnings growth will give scope for re-rating in valuation for many mid cap stocks which were the real victim of the recent correction. However, rupee depreciated and bond yield rose in expectation of increase in June CPI inflation," said Vinod Nair, Head of Research, Geojit Financial Services. 

Reliance Industries, YES Bank, Coal India, Bajaj Auto and Wipro were the top gainers on Sensex, while IndusInd Bank, Kotak Mahindra Bank, Sun Pharma and Hero MotoCorp were the top loser on the 30-share index.

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Tata Consultancy Services, which is due to report its quarterly results later in the day, closed 0.4 per cent lower.

Meanwhile, on Monday, domestic institutional investors (DIIs) picked up shares worth a net Rs 740.39 crore yesterday, while foreign portfolio investors (FPIs) offloaded equities to the tune of Rs 569.91 crore, provisional data showed.