The Nifty and the Sensex ended the session higher by nearly one per cent as the government unleashed a new wave of FDI reforms and Brexit worries eased while hectic buying by institutions and talking-up by influential marketmen helped counter Rexit jitters.

The 30-share BSE index ended higher by 241.01 points or 0.91 per cent at 26,866.92 and the 50-share NSE index Nifty was up 68.3 points or 0.84 per cent at 8,238.50.

Barring FMCG, all other BSE sectoral indices ended in the green. Among them, IT index gained the most by 2.00 per cent, TECk 1.97 per cent, auto 1.49 per cent and metal 1.4 per cent, while FMCG index was down 0.06 per cent.

Top five Sensex gainers were Tata Motors (+3.98%), Tata Steel (+3.27%), Bharti Airtel (+2.6%), Infosys (+2.57%) and TCS (+2.00%), while the major losers were Asian Paints (-0.6%), Coal India (-0.46%), Axis Bank (-0.39%), Sun Pharma (-0.37%) and GAIL (-0.35%).

Aviation stocks were in the limelight after the Centre’s decision to allow 100 per cent FDI in civil aviation. Stocks of Spicejet, Jet Airways and InterGlobe surged by up to 7.36 per cent.

Shares of companies involved in manufacturing of defence equipments such as Reliance Defence, BEL and Bharat Forge also witnessed strong rally, rising by up to 7.39 per cent.

Early trade

The stock market benchmark index Sensex was down at 26,438 points in pre-open trade between 9-9.15 am, down nearly 200 points from its previous close on RBI Governor Raghuram Rajan's decision to quit once his term comes to end in September, but early morning buying orders helped limit the opening loss at 178 points.

Hectic buying thereafter helped the Sensex return to positive territory within minutes and the index touched an intra-day high of 26,885.49 points.

Fitch allays concerns

Sentiment got a boost after global rating agency Fitch allayed concerns of any impact on India’s sovereign ratings due to RBI Governor Raghuram Rajan’s decision against a second term saying “policies are more important than personalities” on this front.

Meanwhile, the Reserve Bank of India bought government’s securities worth Rs 10,000 crore via OMO purchase auction held today, while the total amount offered by participants stood at Rs 45,922 crore.

In sweeping reforms, the government has decided to ease Foreign Direct Investment (FDI) norms in civil aviation, single-brand retail, defence and pharma by permitting more investments under automatic route.

DII buying

Marketmen said some big domestic institutions could have been pressed into buying to check the losses, as turnover was relatively higher in early morning trade for a Monday.

Seeking to allay the concerns, government sources said that a successor would be announced well in advance to replace Rajan after he demits office at the end of his current three-year tenure on September 4 to help smoothen the transition.

Several prominent marketmen, including ace investor Rakesh Jhunjhunwala, said in their commentaries before and during the trading hours that Rajan’s exit should not be a major worry for the markets as right policies are in place.

'Rockstar' RBI Governor

Rajan, a former IMF chief economist who is credited to have predicted the 2008 global financial crisis, has been often hailed as the ‘rockstar’ central bank Governor ever since becoming RBI Governor in September 2013 and for containing rupee volatility amid global market uncertainties.

For India, Fitch Ratings has ‘BBB—’ rating —— the lowest investment grade rating just a notch above junk grade —— with a stable outlook and has forecast 8 per cent GDP growth for 2016-17. Other agencies also have similar ratings for India and any tinkering with these ratings generally results in huge impact on rupee and stocks.

Meanwhile, the regulatory authorities and stock exchanges had beefed up their risk management and surveillance mechanism to address any eventuality today, while a close vigil was mounted for manipulators seeking to exploit the volatility.

Marketmen said the new polls showing Britain remaining in the European Union also helped allay investor concerns.

A report by SMC Global said: "Asian stocks traded mostly higher after two opinion polls published on Saturday showed the "Remain" camp was gathering momentum in the Brexit vote. Oil extended gains and the yen weakened against the dollar on eased Brexit concerns. US stocks fell slightly on Friday, as caution prevailed ahead of the Brexit vote and data on housing starts and building permits painted a mixed picture of the economy.

Global stocks rose on Monday and sterling strengthened broadly while safe-havens, including the yen and gold, retreated after polls showed support for Britain staying in the EU regaining momentum before Thursday’s referendum.