bse, nse, nifty, sensex, india, stock markets, modi
A man looks at a screen across the road displaying the election results on the facade of the Bombay Stock Exchange (BSE) building in Mumbai May 16, 2014 (representational image).Reuters file

Optimism prevailed on Tuesday after a prolonged spell of downbeat sentiments on the stock exchanges, enabling the two benchmark indices to vault almost 1.60 percent. The Sensex gained 406 points to close at 26,213 led by ITC, Tata Steel and Adani Ports, while the NSE Nifty closed 125 points, or 1.58 percent, higher at 8,033. The bearish mood induced by demonetisation seemed to have taken a back seat, at least for the time being.

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ITC closed 4.02 percent higher at Rs 234, Tata Steel gained 3.23 percent to end at Rs 392 and Adani Ports gained 2.87 percent to close at Rs 268. Other index gainers included ICICI Bank (up 2.25 percent at Rs 254) and Lupin (up 2.13 percent at Rs 1,435).

Stocks that hit a new 52-week low on the BSE include Castrol India, Reliance Communication, Wockhardt, Jet Airways, HDIL, Just Dial and Blue Dart Express.

"With union budget just a month away, potential for tax reliefs for SMEs and possible increase in income tax exemption limits, among other relief measures, gave markets enough distraction to shrug off the prevailing bearish bias, setting off sharp short covering rallies," Anand James, chief market strategist, Geojit BNP Paribas Financial Services, said in a note.

Some of the sectoral indices that mirrored Sensex rally included Auto (up 1.54 percent), Telecom (1.36 percent), Industrials (1.52 percent) and Bankex (1.31 percent).

The markets opened with modest gains in the morning; the 30-scrip Sensex was up 14 points at 25,821, while the 50-scrip Nifty was trading higher at 7,914, a gain of 6 points. Shares of The Mandhana Retail Ventures (MRV), which has a tie-up with Salman Khan, trade flat at Rs 172 apiece; the stock had spurted almost 18 percent intraday when it listed on December 14.

In other news, Infosys co-founder Nandan Nilekani and former head of UIDAI has invested an additional $5 million in 10i Commerce Services, a Bengaluru-based e-commerce start-up, DealStreetAsia reported, citing sources and regulatory papers. 10i is planning an open payments network shortly to enable undertake digital transactions across platforms.