Mumbai, Oct 3 (IANS): Key Indian equity indices -- the BSE Sensex and the NSE Nifty50 -- on Tuesday surged to close on a higher note as positive global cues, coupled with healthy buying in automobile, consumer durables, and oil and gas stocks, lifted investors' sentiments.

According to market observers, healthy automobile results for August, coupled with expectations of an economic stimulus package, added fillip to the upward trend of the indices.

The wider 51-scrip Nifty50 of the National Stock Exchange (NSE) rose by 70.90 points, or 0.72 per cent, to close at 9,859.50 points.

The 30-scrip Sensitive Index (Sensex) of the BSE closed at 31,497.38 points -- up 213.66 points, or 0.68 per cent.

The BSE market breadth was bullish -- with 1,397 advances and 1,273 declines.

"Nifty showed a fine upmove today on the first day of the week and the month, and closed the day with smart gains of 71 points. Mid-cap index outperformed the Nifty while the small-cap index underperformed," Deepak Jasani, Head - Retail Research, HDFC Securities, told IANS.

In terms of the broader markets, the mid-cap index rose by 0.77 per cent, while the small-cap index gained 0.49 per cent.

"Major Asian markets have ended on a positive note, barring the Straits Times. European indices like FTSE 100, DAX and CAC 40 all traded higher," Jasani added.

Anand James, Chief Market Strategist, Geojit Financial Services, said: "Lacklustre show from the PSU banks forced the investors to be on the backfoot ahead of the Reserve Bank of India (RBI) policy meet, but positive auto sales numbers kept markets afloat."

"Few expect a rate cut given rising inflation expectations, which has increased the surprise potential of tomorrow's call. Nevertheless, upcoming earnings season should mean that stock specific moves should take dominance over broad market sentiments," said James.

On the currency front, the rupee weakened by 21 paise to close at 65.50 against the US dollar from its previous close at 65.29.

In terms of investments, provisional data with the exchanges showed that foreign institutional investors (FIIs) sold scrips worth Rs 693.03 crore while domestic institutional investors (DIIs) purchased stocks worth Rs 1,552.41 crore.

According to Dhruv Desai, Director and Chief Operating Officer of Tradebulls, the markets extended gains for the third straight day on Tuesday as automakers such as Tata Motors surged after posting strong monthly sales.

"Dr. Reddy's Laboratories jumped on the launch of a drug in its key US market," Desai told IANS.

"But worries about the economy remain with domestic shares falling for a second consecutive month in September, hurt by a slew of negative global and domestic factors, including expectations of further rate hikes by the US Federal Reserve," he added.

Sector-wise, the S&P BSE consumer durables index surged by 391.42 points, followed by oil and gas index by 199.63 points and automobile index by 199.24 points.

On the other hand, the S&P BSE capital goods index fell by 34.21 points, power index by 10.75 points and telecom index by 0.62 points.

Major Sensex gainers on Tuesday were: Tata Motors (DVR), up 4.95 per cent at Rs 233.40; Tata Motors, up 3.78 per cent at Rs 416.40; Asian Paints, up 2.72 per cent at Rs 1,147.45; Reliance Industries, up 2.07 per cent at Rs 798.35; and Bajaj Auto, up 1.79 per cent at Rs 3,163.80.

Major Sensex losers were: Power Grid, down 2.16 per cent at Rs 206.10; Maruti Suzuki, down 1.06 per cent at Rs 7,888.50; State Bank of India, down 0.97 per cent at Rs 251.30; Cipla, down 0.78 per cent at Rs 580.40; and Bharti Airtel, down 0.77 per cent at Rs 385.65.