Sensex closes 1.3% up on broadbased rally; L&T, ITC lead

The BSE benchmark rose 226.37 points or 1.30%, to close at 17,618.35 led by support from 27 out of 30 stocks. Meanwhile, the NSE benchmark gained 70.20 points at 5,345.35.

Dilip Bhat, Joint MD, Prabhudas Lilladher feels the market seems to be very happily consolidating around 5,300-5,350.

According to him, a series of complimentary events probably are playing it out like current bond yields suggest that the Reserve Bank of India is going to ease the monetary policy, appreciation in rupee and some kind of optimism on the reforms front.

France's CAC and Germany's DAX rose 1.2% each after the Eurozone finance ministers agreed a deal which will release euro 30 billion of bailout funds for Spain's troubled lenders by the end of July. Britain's FTSE rose 0.8%.

The euro zone ministers also decided to grant Spain an extra year until 2014 to reach its deficit reduction targets but made no apparent progress on how the bloc's new rescue fund, the ESM, will be used to help lower Madrid's elevated borrowing costs. Spain and Italy's 10-year bond yields declined after the news.

Back home, the Indian rupee recovered quite sharply, appreciating by 42 paise to 55.50 against the US dollar.

All sectoral indices closed in green. Capital Goods, FMCG, Auto, Bank, Metal, Realty and Power indices were up 1-1.75%. Oil & Gas, Healthcare and IT rose 0.6-0.9%.

Engineering and construction major by sales Larsen & Toubro surged 2% and state-owned power equipment manufacturer BHEL gained 1%.

Private sector lender HDFC Bank jumped 2% while its rivals ICICI Bank and State Bank of India were up 1.37% and 0.71%, respectively.

Cigarette major ITC spiked 2.7%. Top commercial vehicle maker Tata Motors and country's largest car manufacturer Maruti Suzuki moved up over 2.5%.

India's most valued stock Reliance Industries, housing finance company HDFC and top telecom operator Bharti Airtel were up over 1%.

Among metals stocks, Jindal Steel, Hindalco and Sterlite Industries climbed 2-2.7%. Software services exporters Infosys and TCS were up 0.8% and 0.4%, respectively.

Advancing shares outnumbered declining by 1739 to 1127 on the BSE.

In the second line shares, Punj Lloyd, HDIL, Voltas, Unitech, Indiabulls Real, PTC India, Manappuram Finance, Reliance Capital and Reliance Power gained 4-8%.

Dewan Housing advanced 6% after yesterday's fall of 14.5%. Reports yesterday suggested that the Dewan Housing stock was one of the few stocks which were manipulated by a few market players. Kapil Wadhawan, CMD of Dewan Housing, however, tells CNBC-TV18 that there has been no official communiqué from regulatory authorities regarding this matter.

(With inputs from Reuters)