The BSE Sensex surged over 600 points or nearly 2.7 per cent to a record high of 22,955.99 on Friday. The broader Nifty jumped over 185 points to a high of 6,850 and traded nearly 20 points away from its all-time high, hit on April 25, 2014. (Track markets)
Friday's rally is surprising considering markets have been choppy ahead of the electoral verdict next week. The BSE Sensex and Nifty have shed 2 per cent since the peak registered on April 25.
Market analyst Rajat Bose said today's sharp gains could be short covering after four days of weakness or there might be a sense about a positive outcome on May 16, when the election results will be announced.
"Markets have been giving worrying signs over the last few sessions even as volumes dropped sharply... We needed some kind of comeback of this kind," he said.
The five-week long elections are set to conclude on Monday, with exit polls from media organisations to be issued after the last votes are cast. Indian markets have rallied to record highs on hopes of a strong government post elections. The Sensex and Nifty are up nearly 8 per cent year-to-date, primarily on the back of strong buying by overseas investors, who have pumped in over $5 billion in 2014.
Gains today were accompanied with high volatility. The NSE volatility index traded 10.10 per cent higher at 37.76 and is not far from its 52-week high of 38.04. The volatility index is often referred to as the fear index or the fear gauge because as it rises, market participants need to become more proactive and careful about their portfolios.
Banking stocks led the gains today, with the Bank Nifty hitting a record high. Private lender ICICI Bank was among the top Nifty gainer, up 5.9 per cent. (Read story)
Recent underperformers attracted investor attention. Tata Power, which fell 3.05 per cent in the last three sessions, gained 4.8 per cent on value buying. (Track top gainers and losers)
Asian shares mostly slumped on Friday as a tense situation in Ukraine made investors cautious, though a tame inflation report from China calmed some nerves.
(With inputs from Reuters)
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