Expectations of further economic reforms and healthy macro-data buoyed investors' sentiments and led a barometer index of the Indian equity markets to provisionally close over 500 points up on Friday.
The barometer sensitive index (Sensex) of the Bombay Stock Exchange (BSE) provisionally gained 1.82 percent in the day's trade as interest-rate sensitive stocks like banks, automobile and capital goods zoomed.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) also made healthy gains during the day's trade. It closed 162 points or 1.94 percent up at 8,517.85 points.
The S&P BSE Sensex, which opened at 27,668.06 points, provisionally closed at 28,051.36 points (at 3.30 p.m.) -- up 501.83 points or 1.82 percent from the previous day's close at 27,549.53 points.
The Sensex touched a high of 28,100.64 points and a low of 27,643.20 points in the intra-day trade.
Investors were seen hopeful of a rate-cut based on healthy macro-economic data that was released on Friday.
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The data pertaining to the wholesale price index (WPI) showed that India's annual wholesale inflation for July fell for the ninth straight month to a historic low of (-)4.05 percent from (-)2.4 percent for the month before.
The WPI coupled with consumer price index (CPI) have pointed at a gradual reining in of prices.
The CPI released on Wednesday showed a fall in India's annual retail inflation rate to 3.78 percent in July.
"The figures from both the CPI and the WPI have come in better-than-expected and the markets and India Inc was waiting for this moment to press their case for a rate cut with the Reserve Bank of India (RBI)," Devendra Nevgi, chief executive of ZyFin Advisors told IANS.
"Though the RBI takes into account the CPI for deciding upon the rate decisions, on a multi-indicator level WPI data will add weight to the case for a rate cut."
According to Nevgi, another major factor supporting the relief rally was the appreciation in the value of yuan after three consecutive days of fall has brought in some relief to the world markets and the Indian rupee.
"The rupee has now stabilised after touching a 24-month low yesterday (Thursday). Yuan appreciation was not expected but it has brought in relief to the Indian markets," Nevgi added.