Data on Tuesday showed wholesale price index (WPI) rose a slower-than-expected 6.55 per cent in January --its lowest level in more than two years--leading to a rally in automakers and financials on hopes of interest rate cuts.
The top gainer on Wednesday was Tata Motors, which rose 7.4 per cent to close at its life high of 287.85 rupees. The company reported a better-than-expected 40.5 per cent rise in December quarter net profit on Monday.
Its global vehicle sales rose 21 per cent in January led by strong sales of its luxury Jaguar Land Rover vehicles.
The stock, which was split into five in July-September last year, fell nearly 32 per cent in 2011.
The main 30-share BSE stock index rose 535.84 points to close at 18,202.41 on Wednesday, its highest close since August 1, 2011. Twenty-seven of its components advanced.
The main index has risen more than 17 per cent this year, with foreign institutional investors buying about $4.2 billion of Indian equities.
However, analysts are cautious.
"The rally is a big surprise for everybody ... and a correction is definitely seen sometime next week," R.K. Gupta, managing director, Taurus Mutual Fund, said.
"Lowering inflation and dilution of problems faced by Greece is leading to heavy buying in the market."
Top car maker Maruti Suzuki rose 2.8 per cent and Mahindra & Mahindra rose 2.4 per cent.
ICICI Bank rose 4 per cent to lead gains while top lender State Bank of India rose 2.3 per cent. HDFC Bank was up 2.9 per cent.
"From the strong quarterly earnings, it is clear that corporates are able to manage their treasury, and interest liabilities are coming down, which will help banks and automakers," Gupta said.
Engineering conglomerate Larsen & Toubro jumped 5.5 per cent and construction company Jaiprakash Associates rallied 8 per cent.
Shares in power utilities soared after the government ordered state-run miner Coal India to sign 20-year guaranteed fuel supply contracts with power producers for projects that would be ready for generation by March 2015.
Adani Power surged 13.8 per cent, Reliance Power 12.9 per cent, Tata Power 5.9 per cent and JSW Energy more than 7 per cent.
Energy major Reliance Industries fell 1.44 per cent to 836.65 rupees.
HSBC downgraded Reliance to underweight from neutral in the backdrop of the recent stock run-up in response to the company's share buyback announcement.
Reliance's existing exploration and refinery businesses are under pressure owing to falling gas production and a decrease in downstream margins, the bank said.
Gas output from Reliance's D6 block may be 66 per cent lower than initial estimate from April, government sources said on Tuesday.
State-run explorer Oil and Natural Gas Corp extended gains and rose 1.1 per cent after a panel of Indian ministers approved a plan to sell shares in the company through an auction but did not set a timeline.
Power equipment maker Bharat Heavy Electricals Ltd rose 4.6 per cent after federal Heavy Industries Minister Praful Patel said follow-on share sale in the company would happen in the next fiscal year starting April.
The MSCI's measure of Asian markets other than Japan was up 1.65 per cent, while Japan's Nikkei was 2.3 per cent higher.
The 50-share NSE index was up 2.14 per cent at 5,531.95. There were 2.4 gainers for every loser in the broader market on a heavy volume of 1.31 billion shares.
(Source- http://economictimes.indiatimes.com)
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