After a weak rupee wrecked havoc in early trade, the BSE Sensex today staged a smart comeback by jumping 136 points and closed above 17,000-level for the first time in seven weeks as falling oil prices and upgrade of Indian market by JP Morgan boosted sentiment.
The BSE benchmark index, which lost over 81 points at the outset, bounced back in late trade by 135.93 points, or 0.80%, to close at 17,032.56, a level last seen on May 3.
Likewise, the 50-share NSE index Nifty fell to 5,093.45 before recovering to close higher by 44.45 points, or 0.87% to 5,165.
ITC, ICICI Bank, L&T and SBI stocks jumped by 2-3% to lead the smart rally.
Dealers said the index entered the positive zone ignoring the rupee hitting a record low of 56.57 in the last one hour on robust buying in realty, banks and capital goods. The market breadth was positive as 1,658 stocks closed with gains while 1,079 ended with losses.
Brokers said market recovered sharply after oil (Brent) prices dropped to an 18-month low of USD 91 per barrel in global markets while JP Morgan's upgrade supported the mood.
"Our proposition is that an upgrade cycle starts late 2012. This will be driven by lower oil prices as the rupee price of Brent (oil) is 18% below its 2012 peak," said JP Morgan's emerging market equity strategist Adrian Mowat.
The upsurge was further supported as speculators rushed to cover pending positions amid a surprise rise in stocks as investors bought bluechips, said traders.
The rising trend was capped following a steep 2.6% fall in index heavyweight Reliance Industries after its Canada-based partner Niko Resources said KG-D6 gas block holds 80% less reserves than earlier estimated.
Investors seemed to have ignored the rupee hitting a record low of 56.57 and was last trading at 56.4 levels against the dollar while global markets traded lower after Federal Reserve lowered growth outlook for the US economy.
Most Asian stocks ended lower as the latest data showed manufacturing activity cooling further in China and after investors hoping for aggressive Federal Reserve stimulus were also disappointed.
Key indices in China, Singapore, Taiwan, South Korea and Hong Kong finished lower by 0.76% to 1.40% while Japan's Nikkei moved up by 0.82%.
European stocks were also trading marginally lower as key benchmark indices in France, Germany and the UK were down by 0.39% to 0.55%.
In the Indian market, small-cap and mid-cap shares also moved up on good buying support from retail investors as those indices firmed in the 0.7-0.8% range.
Out of the 30-share Sensex pack, 25 scrips finished with gains while five ended with losses.
Major gainers from the Sensex were BHEL (3.60 pc), SBI (2.89 pc), L&T (2.30 pc), Sterlite (2.16 pc), ICICI Bank (2.07 pc), ITC (2.07 pc), Hero MotoCorp (2.01 pc), Tata Power (1.95 pc), Sun Pharma (1.70 pc), HDFC Bank (1.40 pc), HUL (1.21 pc), NTPC (1.02 pc), Maruti Suzuki (1.12 pc), Coal India (1.08 pc) and Tata Motors (1.02 pc).
However, Reliance Industries fell by 2.58% and TCS dropped by 2.18%.
Among the sectoral indices, the BSE-Realty rose by 2.89%, followed by the BSE-Capital Goods (2.18 pc), the BSE-Bankex (2.06 pc), the BSE-Power (1.74 pc), the BSE-PSU (1.33 pc) and the BSE-FMCG (1.30 pc).
The total turnover moved up further to Rs 1,960.73 crore fromn Rs 1,903.98 crore yesterday.
"Post market hours, the CCI order on the Cement cartelization was released, which should keep cement stocks in limelight tomorrow," said Sanjeev Zarbade, Vice President (Private Client Group Research), Kotak Securities.
Foreign Institutional Investors (FIIs) bought shares worth a net Rs 119.58 crores yesterday as per provisional data from the stock exchanges.