The BSE Sensex and NSE Nifty maintained early gains quite smartly in the afternoon trade as European markets like France's CAC, Germany's DAX and Britain's FTSE opened 1.5-3% higher after European Union, at its summit, reaffirmed its commitment to use its bailout funds flexibly.
Indian equities were trading at two-month high - The BSE benchmark climbed 369.85 points or 2.18% to 17,360.61 and the NSE benchmark rose 112 points to 5,261.15.
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In an interview to CNBC-TV18, Regan F Homavazir of Darashaw says, the Nifty is likely to head towards 5,365. Now to get on to any significant downside, you will have to break the psychological level of 5,000. In the event the 5,000 level does not break, we will see significant upsides, he adds.
Country's largest lenders State Bank of India, ICICI Bank and HDFC Bank climbed 2-3.7%. Index heavyweight and cigarette major ITC was up 3%.
Engineering and construction major by sales Larsen & Toubro and state-owned power equipment maker BHEL rallied 3.5% each.
Shares of Reliance Industries, Infosys, TCS, Tata Motors and ONGC gained 2%. Private power producer Tata Power topped the buying list, rising nearly 4% after the company completed the purchase of 51% equity shares of Tata BP Solar India Limited.
The rupee advanced by 33 paise to 56.47 against the US dollar led by sustained selling of the US dollar by banks and exporters.
The euro surged 1.24% to 1.26 against US dollar, poised to make its biggest daily jump in 8 months after European leaders agreed today to create a single supervisory body for euro zone banks and allow them to be recapitalised directly by the currency area's rescue fund, without adding to government debt.
Commodities too participated in the rally - Brent crude rose 2.2% to USD 93.36 a barrel and NYMEX crude was up 2.76% at USD 79.83 a barrel. Copper too went up 2% while precious metals like gold