MUMBAI: A global relief rally sponsored by reforms and stimulus measures by the Chinese government supported the Indian equity markets - leading a barometer index to gain 401 points at close on Wednesday.

The S&P BSE Sensex, which opened at 25,682.87 points, closed at 25,719.58 points - up 401.71 points or 1.59 percent from the previous day's close at 25,317.87 points.

Rally was also seen on the wider 50-scrip Nifty of the National Stock Exchange (NSE). The CNX Nifty closed higher by 130.35 points or 1.70 percent at 7,818.60 points.

Analysts cited that the global relief rally which was strengthened after the U.S. markets joined-in after the Labour Day holiday and reforms being initiated by the Chinese government boosted investor confidence.

"The global relief rally has been strengthened after the U.S. markets opened on Tuesday. The positive cues coming in from China has helped buoy sentiments," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services told IANS.

"The Chinese are implementing reforms that will encourage long term investments in stock markets by waving taxes and installing circuit breaker systems to curb volatility in the stock markets."

The Chinese government has announced plans to increase funding to infrastructure projects and in part provide a stimulus package that might include tax breaks and other incentives.

Among the Chinese markets, Hong Kong's Hang Seng gained by 4.25 percent and Shanghai Composite Index was higher by 1.60 percent.

According to James, other trigger for the rally was the meeting between Modi and industry representatives on Tuesday, while reports on the upcoming seventh pay commission also brought in cheers to investors.

"The PM's meeting and message for the industry to increase investments has sent a very positive sign. On the other hand the seventh pay commission, strengthening rupee and cooling oil prices supported the markets," James added.

Sector-wise, all 12 sub-indices of the BSE made gains during the trade.