Indices on Thursday staged a strong recovery after witnessing two days of selling pressure.
Market players said short-covering aided by foreign institutional buying boosted the sentiment on the last trading day of the week.
Foreign institutional investors (FIIs) bought stocks worth Rs 433.40 crore on Thursday, as per provisional data on BSE.
The S&P BSE Sensex ended with a 351.61-point gain, or 1.58%, over the previous close at 22628.84, while the CNX Nifty closed 1.56% higher, or 104.10 points, at 6779.40.
The feel-good factor on account of the ongoing general elections continue to remain buoyant. There is a general perception that the new government was likely to be headed by the Bharatiya Janata Party, which is seen as one that could put the country's economic growth back on the fast track.
"Till May 12 (the last day of polling), the trend will remain upwards which does not mean periodic corrections won't occur," said Arun Kejriwal, founder of Kejriwal Research and Investment Services, an advisory firm.
Intermittent corrections cannot be ruled out as was the case in the two trading days, Tuesday and Wednesday, when the Sensex fell by 144.03 points and 207.70 points respectively, and Nifty by 43.20 and 57.80 points. Even though the market recovered Thursday, the indices were almost static week on week, with the Sensex losing 0.12 points and the Nifty gaining marginally by 3.10 points.
Market participants said most players preferred to square off their position due to the long weekend on account of Good Friday and another the short trading week ahead, which incidentally is also the F&O expiry week. The expiry for the coming week falls on Wednesday instead of Thursday due to a public holiday on that day for polls.
What is noteworthy is FIIs investments in April, till date, have been showing signs of tapering as compared to the previous month's corresponding investments. For the period April 1 to 17, FIIs' net equity investments stood at Rs 4,334.50 crore while during the same period of the previous month their net investments were Rs 7,118.90 crore.
Overall, market participants expect the bullish tone to linger till March 16, when the poll results are announced.