Sensex closes 242 points higher; tech index perks up 4%

The market rallied over 1.5% in the second half of the day, snapping three-day losing streak on Wednesday. Rally in technology, private banks, oil & gas, metal and auto lifted the 50-share NSE Nifty above the 5,000 mark and shrugged off rise in August inflation numbers. The index shot up 71.60 points to 5,012.55 and the 30-share BSE Sensex jumped 242.16 points, to close at 16,709.6.

Senior portfolio manager Punita Kumar Sinha of Blackstone Group believes Indian market is in a better position compared to the developed markets.

European markets too were quite supportive; they were trading 0.7-1.2% higher. There were reports that Angela Merkel (German Chancellor), George Papandreou (Greek PM) and Nicolas Sarkozy (French President) will hold conference call today to get further political support for Greece.

The Indian rupee, which saw huge depreciation, managed to recover partly in today's trade from the near-two-year low of 48.02 per dollar hit earlier, as local shares rebounded and the euro pulled back.

"FII outflow a trigger for the depreciating rupee,'' Sinha evaluated. It was trading at 47.7 per dollar.

In the economic data, Inflation for the month of August has come in higher-than-expected at 9.78% as food and fuel prices continue to soar. This was significantly higher than the July inflation of 9.22%. A CNBC poll of market analysts had pegged August inflation at 9.6%.