Despite weak opening of European markets, Indian equities extended their gains this afternoon, with a key index ruling about 2.60 per cent higher than its previous close an hour before the closing bell.

However, inflation and IIP figures backed the market reaction.

Industrial production slipped by 0.5% in January 2009 despite stimulus packages declared by the administration to defend against the impact of worldwide slump.

This is the third time repeatedly where IIP contracted during this fiscal.

For the week ended Feb. 28, 2009, the country’s benchmark wholesale price index (WPI), inflation declined further to more than a six-year low to stand at 2.43% as compared to 3.03% a week ago.

Buying action was seen across oil & gas, auto, banking and metal stocks, while consumer durables went down

The BSE midcap index was ruling 0.48 per cent higher, while the BSE smallcap index was up 0.42 per cent.

At 02:54 p.m., the 30-share index Sensex gained 212.51 points at 8,372.91 after hitting a high of 8,439.71 and a low of 8,274.78.

Meanwhile the broad based Nifty stood at 2.625.45, up 52.45 points, after hitting a high of 2,646.10 and a low of 2,574.50.

The overall market breadth was positive with 1,158 advancements as against 196 declinations.

The top gainers in the 30-share index included ICICI Bank (8.16%), Sterlite Industries (India) (7.38%), Tata Motors (6.25%), Maruti Suzuki India (5.51%), Sun Pharmaceutical Industries (4.47%), and Reliance Industries (4.31%).

On the other hand, Bharti Airtel (5.57%), Tata Power Company (2.46%), DLF (1.08%), NTPC (0.91%), and HDFC Bank (0.61%) were the major losers in the Sensex.

Shares of Bharti Airtel were badly hit in today’s session after the company`s CEO sold his complete stake of 70,000 equity shares in the open market.

Manoj Kumar Kohli, who holds the position of CEO and joint managing director at Bharti Airtel, now holds no shares in the company.

European markets snapped two-day rally as oil companies and banks were down on profit booking. FTSE 100 was down 0.98%, CAC 40 fell 2.06% and DAX slipped 1.76%.