The NSE Nifty too played ball, which took back the 7,800-level. Inflation measured by the wholesale price index plunged to a record low of (-)4.95 percent in August, from (-)4.05 percent in July.

Industrial output numbers, which came out after market hours on Friday, showed that IIP expanded at a higher 4.2 percent in July this year from the same month last year as manufacturing and offtake of capital goods improved. Finance Minister Arun Jaitley today promised investors the 'fairest and predictable taxation regime' as he invited them to invest in various sectors, which in turn calmed the nerves somewhat.

The 30-share barometer ended the day higher by 246.49 points, or 0.96 percent, at 25,856.70 -- its highest closing since August 31. The gauge had lost 109.37 points in the past two straight sessions. Reclaiming the 7,800-level, the broader NSE Nifty hit a high of 7,879.95 before settling at 7,872.25, up 82.95 points, or 1.06 percent.

The closing was a two-week high for both the key indices. Brokers said investors shrugged off another set of soft Chinese data as they looked forward to the US Fed action on the rates front when it meets on September 16-17.

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