The S&P BSE midcap index added 1.4 per cent and the smallcap index gained 2.4 per cent, the most in more than seven months.
Experts said domestic markets played catch-up with global peers after trading resumed after a four-day long weekend. The markets saw their worst quarterly loss in more than a year during the January-March quarter.
Private lender Kotak Mahindra Bank, rallied the most among Sensex stocks, up 4.7 per cent. HDFC Bank rose 2.4 per cent as shares of rival ICICI Bank fell 5.9 per cent amid probe by federal agencies into its lending practices. Other notable gainers included Tata Motors and Hero MotoCorp, which gained 3.5 per cent and 2.7 per cent, respectively, after they reported encouraging sales for March. Sun Pharma and Dr Reddy’s gained 2.5 per cent each.
“Markets rallied due to stellar auto sales and value buying of pharma stocks influenced by US FDA approvals,” said Vinod Nair, head of research, Geojit Financial Services. “We have seen smart pull-back in the domestic market on the back of positive global markets and monthly auto sales numbers. We expect a revival in anticipation of good fourth-quarter results, particularly auto and tech sectors,” said Hemang Jani, head, advisory, Sharekhan.
Overseas investors sold shares worth Rs 6.9 billion, while their domestic counterparts were net buyers to the tune of Rs 4.13 billion, according to provisional data by stock exchanges.
Market players said investors were now waiting for the Reserve Bank of India’s (RBI’s) monetary policy decision on Thursday and company earnings beginning next week.
A slew of key state elections from May till December and national polls scheduled for May 2019 may influence investment decisions.
“Markets are expected to remain choppy and support levels are likely to be tested globally due to looming uncertainty. Back home, investors are focusing on the upcoming RBI policy, while consensus shows status quo on key rates due to declining yield and inflation,” Nair said.
Seventeen of the 19 sectoral indices compiled by BSE advanced, aided by a 2.5 per cent rise in the S&P BSE Industrials Index. The Bankex fell the most, down 0.4 per cent. The RBI is likely to keep the benchmark repurchase rate at 6 per cent on April 5, according to all the 26 economists in a Bloomberg survey. January-March earnings of the Nifty companies are expected to rise an average 17 per cent from a year earlier, slower than the 26 per cent growth in the last three months of 2017.