Indian shares surged 5.42 percent on Wednesday, bouncing back to snap a sharp three-day slide as investors bought into major stocks, dealers said. The benchmark Mumbai 30-share Sensex index rose 702.94 points to 13,664.62 for its third highest ever percentage rise.
"The markets had clearly been oversold. Attractive valuations have led to the sharp buying," said Naresh Garg, chief investment officer at the Sahara Mutual fund. The Sensex had lost 10.12 percent in three straight days, hit by worries over early general elections, inflation and oil prices.
Sentiment improved on media reports that the ruling Congress-led coalition could still secure a parliamentary majority if left-wing parties decide to withdraw support over a controversial nuclear deal with Washington, dealers said. Tension between the communists and the ruling Congress coalition have been running high over the deal, fanning fears of snap elections.
Property, banking, metal and software stocks rose. India's top property firm DLF rose 55.55 rupees or 15.08 percent to 423.95, after the company said Wednesday it would consider next week a proposal to buy back its shares, which had fallen over 25 percent in the past month.