The BSE benchmark Sensex today staged a strong comeback by gaining nearly 265 points on emergence of buying of fundamentally strong stocks available at attractive low levels amid Finance Minister saying that the monthly IIP numbers do not reflect the correct picture of the economy.
The Bombay Stock Exchange benchmark Sensex, which had plunged 575 points in the last three trading sessions, bounced back to close higher by 265.57 points to 17,728.61 as speculations that shares have become cheap relative to earnings overshadowed a slowdown in industrial production.
Similarly, the broad-based National Stock Exchange index Nifty shuttled between 5,319.45 and 5,177.70, before settling higher by 84.20 points to 5,310.
The market received another boost in the later half of the session on the back of Finance Minister Pranab Mukherjee's statement that the monthly Index of Industrial Production (IIP) numbers do not reflect the correct picture of the economy.
The industrial output data, which sank to 1.6 per cent in December from 18 per cent in the same period last year.
In volatile trade, in intra day the index dipped to a low of 17,295.62, a level last seen on June 14.
It later regained strength and touched the day's high of 17,751.56 as banking, consumer durable, auto, capital goods and realty stocks rose on heavy buying by investors and funds.
Brokers said the benchmark, second-worst performer this year after Egypt among 90 indices in the world, has lost 16 per cent from Diwali's record peak as the Reserve Bank of India raised interest rate for the seventh time last month to curb inflation.
Market leader Reliance Industries rose by 1.21 per cent to Rs 910.60 and engineering major Larsen & Toubro jumped 3.99 per cent to Rs 1,556.45.
Financial companies led the upsurge and the most beaten banking index spurted by 3.50 per cent to 11,842.90 as PSU lender State Bank of India climbed 3.52 per cent to Rs 2,584.65 from its lowest close in more than six months.
Consumer durable index proved the second best performer by rising 2.58 per cent to 5,531.13 followed by the auto index which soared by 2.56 per cent to 8,490.82.
Capital goods index rose by 2.04 per cent to 12,636.25.
As buying activity strengthened the investor sentiment, smallcap index rose by 2.94 per cent to 7,808.79 and midcap index by 2.92 per cent to 6,475.92.
IT and Tech sectors, however, remained weak as investors continued to sell software stocks, looking for better option in other sectors.