Source: Agencies04 Apr 2016 17:51:10

New Delhi, April 4: Fag-end buying saved the day for markets as the benchmark Sensex rose 130 points to 25,399.65 on recovery in European stocks from early losses and hopes that Reserve Bank will cut interest rates tomorrow.

Sentiment also got a lift after a monthly survey showed that India's manufacturing activity rose to an eight-month high in March driven by strong rise in business orders, leading firms to scale up output.

"In spite of sharp increase in risk-reward ratio, the market continues to trade at the upper-end of the trend-line due to a strong expectation of RBI rate cut," said Vinod Nair, Head of Research at Geojit BNP Paribas.  

With inflation under check and government sticking to its fiscal consolidation path, market expectations are that RBI may cut interest rate by up to 0.50 per cent to propel growth.

Meanwhile, Finance Minister Arun Jaitley also pitched for easier monetary policy, arguing that high interest rates can make the economy sluggish.

For the day, the 30-share Sensex opened up and advanced to a high of 25,424.15, but profit-booking at improved levels dragged it down to a low of 25,223.49.

However, in the last hour of trading, it staged a strong comeback in line with a recovery in Europe and settled 130.01 points or 0.51 per cent higher at 25,399.65. The gauge had lost 72 points on the first session of new fiscal on Friday.

The NSE Nifty also perked up by 45.75 points or 0.59 per cent to 7,758.80 after moving between 7,764.45 and 7,704.40.

Among auto stocks, M&M, Tata Motors, Bajaj Auto and Hero MotoCorp witnessed brisk buying activity and climbed by up to 4.29 per cent on the back of strong monthly sales figures.