The 30-hare BSE index surged 2,056 points or 4.44 per cent to 48,342; while the broader NSE Nifty was up 571 points or 4.18 per cent at 14,205.
IndusInd Bank, ICICI Bank, SBI, HDFC, M&M and Axis Bank rising as much as 11.45 per cent.
While Dr Reddy, Tech Mahindra, TCS and Sun Pharma were the only losers.
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On the NSE platform, except for Nifty IT and Pharma, all sub-indices were trading in green with Nifty Private Bank and Financial Services up as much as 5.9 per cent.
This is the fourth time in last 10 years that the markets have been in positive territory after the budget proposals.
Finance minister Nirmala Sitharaman unveiled the budget for fiscal 2021-22 with an aim to shore up an economy badly-hit by the novel coronavirus pandemic.
To push growth via infrastructure creation, Sitharaman proposed raising the government’s capital expenditure for FY 2021-22 by 34.5 per cent to Rs 5.5 lakh crore.
Sitharaman also said the government would infuse Rs 20,000 crore into public sector banks (PSBs) in 2021-22, to meet the regulatory norms.
For the current financial year also, the government had made a provision of Rs 20,000 crore for recapitalisation.
Meanwhile, foreign portfolio investors (FPI) have remained net buyers to the tune of Rs 14,649 crore in Indian markets in January, amid availability of global liquidity and emerging markets being a preferred destination for foreign funds.
According to FPI statistics available with depositories, overseas investors pumped in a net of Rs 19,473 crore into equities but pulled out Rs 4,824 crore from the debt segment between January 1 and January 29.
(With inputs from agencies)