The equity markets rose sharply in mid-session on Tuesday after the Government said it planned an additional Rs 25,725 crore in public expenditure during the current fiscal year.
Until 2 p.m., when the Finance Minister announced this in Parliament, the domestic benchmark indices seemed to be headed south, in line with global markets.
But the Government proposal saw the Sensex and the Nifty finally outperforming their global counterparts, with gains of 1.5 per cent.
The Sensex closed 244 points up at 17,227; and the Nifty 81 points up at 5,148.
FIIs were net buyers of equity worth Rs 843 crore, according to provisional data released by the stock exchanges.
Liquidity continues to drive the Indian markets. Money will continue to come to India as long as monetary tightening and withdrawal of stimulus package are not happening, Mr Mehraboon J. Irani, Senior Vice-President of Portfolio Management Services, FCH Centrum Wealth Managers, said.
However, domestic investors, both retail and institutional, took advantage and booked profits.
DIIs were net sellers for Rs 504 crore on the exchanges, while on BSE alone retail investors sold for Rs 263 crore in the net.
A Mumbai-based retail investor, who did not wish to be identified, said he booked profits in Bharti Airtel when the telecom blue chip touched an intra-day high of Rs 332.35 on the NSE.
The Bharti stock gained 5 per cent during the day to close at Rs 331.30.
Index heavyweight Reliance Industries gained 2.47 per cent to close at Rs 1,081.