Key benchmark indices surged to record closing high after the government exceeded its $3.1 billion asset sales target for this fiscal year and as investors bet that the Bharatiya Janata Party-led National Democratic Alliance (NDA) will be able to form the next government at Centre.
In effect, the premium indices of BSE and NSE gained nearly 1.4 per cent each, as the BSE Sensex moved past the psychological 22,000 level.
The BSE Sensex gained 300.16 points, or 1.38 per cent to settle at 22,055.48, a record closing high.
The 50-unit CNX Nifty at NSE rose 88.60 points, or 1.36 per cent to close at 6,583.50, a record closing high. The index hit a lifetime high of 6,591.50 and a low of 6,510.50 in intraday trade.
The Union government had reportedly raised about $905.7 million by selling 9 per cent stake in Axis Bank through block deals on BSE on Friday last. The stake sale is expected to help shrink the government's fiscal deficit.
Finance Minister P Chidambaram had made forecast that the deficit won't exceed 4.6 percent of gross domestic product for the fiscal year ending March 31, 2014.
The government had planned to raise Rs 40, 000 crore by selling stakes in state-run companies, but subsequently lowered expectations.
Foreign institutional investors (FIIs) have been particularly heavy buyers -- latched on to banking names -- during the rally, with net purchases of $1.6 billion of shares so far this month, Sebi data showed.
FIIs bought a net $495 million in Indian bank stocks, while selling a net $791 million in pharmaceutical and biotechnology shares this month as of March 15, 2014. However, broader markets refrained to participate in the rally with the mid and smallcap indices marginally up 0.1 per cent each as compared to the over one percent gains seen on the benchmark index.
Even as the market breadth, indicating the overall health of the market was negative, index heavyweight and cigarette major ITC rose in volatile trade this day.
Another index heavy Reliance edged higher after the company on Saturday last stated that as the Union Cabinet decided the new gas price policy way back in June 2013 and notified the decision on 10 January 2014, the model code of conduct should not be applied for the proposed revision in gas price which is to take effect from April 1, 2014.
The market breadth, indicating the overall health of the market, was negative with 1,604 shares fell and 1,330 stocks rose while a total of 150 scrips remained unchanged.
Domestic equities may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near-month March 2014 series to April 2014 series. The near-month March 2014 F&O contracts expire on Thursday, March 27.
The total turnover for the day on the Bombay Stock Exchange was Rs 2,330 crore.