Markets saw a big pullback rally on Tuesday, with the Sensex logging its biggest single-day gain of over 406 points in nearly three weeks and gold rebounding from an 11-month low, but the rupee struck a discordant note as it weakened to breach the 68-mark against the dollar.
The rally helped the broader Nifty get past the psychological 8,000 level.
Investors took comfort from Finance Minister Arun Jaitley's statement, who underlined the need to have globally compatible tax rates to broad-base the economy.
He has also sought to allay market fears that the government has no intention to impose tax on long-term capital gains on stock earnings.
The flagship BSE Sensex after a positive start continued its climb on increased buying activity and closed at 26,213.44, up 406.34 points, or 1.57 per cent. Tuesday's gain is the biggest single-day rise since December 8 when the 30-share barometer had jumped 457.41 points.
The gauge had lost 233.60 points on Monday, hit by talk of higher taxation after Prime Minister's remarks on securities. At the close, the NSE Nifty was up 124.60 points, or 1.58per cent, at 8,032.85.
Value-buying in several recently battered stocks and covering-up of short positions ahead of December monthly expiry on Thursday provided further momentum, traders said.
European stocks were trading higher as key indices such as Frankfurt, Paris and London's FTSE rose by up to 0.14 percent. Asian stocks ended mixed, with Japan's Nikkei rising0.03 per cent and Shanghai Composite Index shedding 0.19 percent. Hong Kong was shut on Tuesday for a public holiday.
On the other hand, the rupee snapped its two-day rising streak by depreciating 32 paise to breach the 68-mark at 68.06 against the dollar due to month-end demand from importers and the American currency strengthening against other currencies globally.
Gains were widespread, led by metal, pharmaceuticals, FMCG, consumer durables, oil and gas, auto PSU and IT stocks that were widely lapped up. Buying also extended to the broader markets, with mid-cap and small-cap indices advancing.
Gold prices in Chennai went up by a whopping Rs 1,330 toRs 28,040 per 10 grams, while in the national capital, it firmed up Rs 475 to Rs 28,025 per 10 grams on Tuesday, in tandem with a firm trend in the global market and revival of buying by local jewellers.
Globally, in London, gold rose by 1.31 per cent to USD1,143.10 an ounce and silver by 1.37 per cent to USD 15.97 an ounce.