Sensex jumps 170 points to 3-week high

The BSE Sensex and the Nifty rose to a three-week high on Tuesday, with banks extending gains on the government's budget commitment to maintaining fiscal deficit, while firm global prices lifted metal stocks.

Finance Minister Palaniappan Chidambaram stuck to the expected lines in his interim budget on Monday, delivering on his fiscal deficit targets by containing expenditure, but it lacked any major policy announcements and limited itself to tax sops for some industries.

The general elections due in April-May will be the next big trigger for the markets to take any fresh calls on stocks and sectors, an analyst said.

"There won't be any significant events. We expect markets to trade range-bound with a positive bias," said Suresh Parmar, head of institutional equities at KJMC Capital Markets.

The Nifty is expected to trade between 6,000 and 6300 in the short-term, Parmar added.

The Sensex closed 0.83 per cent higher at 20,634.21, while the broader Nifty closed 0.89 per cent higher at 6,127.10. Both were their highest close since January 29.

The gains were also supported by strong buying by overseas investors, who bought Indian stocks worth 5.22 billion rupees on Monday, provisional data showed.

Bank shares gained 2.41 per cent adding to Monday's 1.2 per cent rise after finance minister announced a fiscal deficit target of 4.1 per cent of the GDP, and a gross market borrowing of Rs 597,000 crore, below market expectations.

State Bank of India gained 1.86 per cent while ICICI Bank gained 2.84 per cent.

Metal stocks were up on value-buying as investors bet on higher global prices and a spurt in Chinese buying. Tata Steel gained 1.5 per cent while Jindal Steel and Power closed 6.81 per cent higher.