Sensex up 118 points

Mumbai: The BSE Sensex gained 118.32 points yesterday and closed at 6221.06points.The Nifty also appreciated by 2.14 per cent, gaining 40.95 points, and closed at 1954.55.

Brokers attribute the rally to value buying as the markets had dropped to considerably lower levels. The confusion over the possible cap on foreign institutional investors' inflows and taxing their investments in India was cleared well before the markets opened.

The finance minister, P Chidambaram, firmly asserted on Wednesday that there were no plans to cap or tax FIIs. The RBI governor, Y V Reddy also clarified subsequent to his initial statement that the effectiveness of these measures could be arguable and hence undesirable.

Stock markets went into trade with the confidence that no such measures would be taken. Buying in frontline stocks and index heavyweights buoyed the market.