Mumbai: The BSE benchmark index Sensex on Tuesday closed higher by 76 points on funds buying in bluechips as eased inflation bolstered hopes of policy rate cuts by RBI.

The barometer, which had gained 24 points in the previous session, added another 75.73 points, or 0.43 per cent to 17,848.57 points.

The investor confidence bolstered on easing inflation despite a weakening global trend, brokers said.

European and Asian stocks declined after Moodys Investors Service downgraded six euro-area countries.

In intra-day trading, the 30-share Sensex climbed to 17,890.33 on better than expected quarter results by Tata Motors and short-covering in some frontline stocks.

Tata Motors posted 40.51 per cent jump in consolidated net profit to Rs 3,406 crore for the quarter ended 31st December, 2011.

The broad-based Nifty of the National Stock Exchange rose by 25.85 points, or 0.48 per cent, to 5,416.05. It touched the day’s high of 5,428.05.

The upsurge was led by capital goods, realty, auto and banking stocks on hopes a further cut in interest rates would add to their business.

The capital goods sector gained the most by 2.30 per cent to 10,452.15 as Larsen and Toubro spurted by 3.87 per cent to Rs 1,379.35 and BHEL by 1.67 per cent to Rs 264.95.

The realty sector was the second best performer by rising 2.29 per cent to 1,933.77 followed by auto sector index by 2.14 per cent to 10,005.14 and banking index by 0.81 per cent to 12,127.07.

Prominent gainers were State Bank of India, ICICI Bank, Tata Motors, Hero MotoCorp, Mahindra and Mahindra, Infosys, Hindalco, Sun Pharma and Tata Steel on investment buying.