The improved sentiment boosted investor confidence, resulting in a flurry of buying activities mainly in rate sensitive stocks.
Contrary to market expectations, inflation for July declined to 6.87 per cent, the lowest level since January 2010, from 7.25 per cent in June. The annual inflation was at 9.36 per cent during the same month in the previous year.
According to analysts, the drop in price rate will provide some reprieve to the Government and enable the Central bank to mull over possible rate cut.
A sharp reversal in global equities due to positive growth data from France and Germany also weighed on sentiment.
After a shaky start following weak global cues, the market mostly traded in a tight range amidst select buying in heavyweights. However, better-than-expected inflation numbers took bourses by surprise, triggering a reversal in the trend.
Meanwhile, India's July export trade data showed a 14.8 per cent contraction - steepest fall in three years - to USD 22.4 billion, impacted by global demand slowdown. This was another disappointing macroeconomic indicator after last week's sluggish industrial output numbers.
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Banking, oil & energy, auto, metal, FMCG and tech saw frantic buying. The 50-share Nifty oscillated between a high of 5,387.05 and a low of 5,328.80 before ending at 5,380.35, a rise of 32.45 points, or 0.61 per cent, over the last close.
Tata Motors, Ranbaxy, IDFC, Tata Steel, Axis Bank, ICICI Bank, Jindal Steel, JP Associates, Coal India and PNB were the top percentage-wise gainers from the Nifty pack. Sun Pharma, HDFC, Hindalco, Sterlite Industries, BPCL, Sesa Goa, Bajaj Auto, Siemens, Ambuja Cement and DLF topped losers list.
The turnover in cash segment rose to Rs 9,384.77 crore from Rs 8,884.72 crore yesterday. Overall, 5,495.27 lakh shares changed hands in 46,22,016 trades. Market capitalisation stood at Rs 60,92,797 crore.