The hefty orders that engineering and construction firms have been receiving over the past few weeks acted as a trigger.
Orders for capital goods companies have been pouring in from state and central governments as well as overseas entities.
In the first three weeks of January, construction and engineering firms received Rs 4,000 crore (Rs 40 billion) new orders.
Siemens on Friday hit the roof at Rs 4,146.55 intra-day before closing at Rs 4,102.80. The stock gained 10.66 per cent against its previous day's close of Rs 3,707.50. The company's board is scheduled to take up a proposal of stock split this month.
Reliance Industrial Infrastructures gained 10 per cent to Rs 391.70, ABB gained 7 per cent (Rs 2,249.70), BEML gained 4.8 per cent (Rs 1,267.20), Alstom Projects gained 5.4 per cent to Rs 265 and BHEL gained 3.3 per cent to Rs 1,581.40 on the BSE.
The BSE capital goods index, tracking the performance of stocks of this sector, appreciated 7.8 per cent in first three weeks of January compared with the 1 per cent gain in the Sensex. In the last two days, the capital goods index has gained 310 points to close at 6,266.
Foreign Institutional Investors are accumulating the equity shares of these stocks on growth prospects.
They have raised their stakes in L&T, Esab India, Siemens, Kirloskar Brothers, Gammon India and BEML in the range of one per cent to four per cent in the third-quarter of the financial year.
The central government's ambitious plan of widening and strengthening the existing lane carriageways of national highway has bloated the order book position of these companies.
The National Highways Authority of India placed orders worth Rs 1,113 crore (Rs 11.23 billion) with Simplex Infrastructure, IVRCL Infrastructures and Nagarjuna Constructions last week.
L&T has received orders worth Rs 96 crore (Rs 960 billion) for the construction of a sewage treatment plant including a sewerage network at Willayat Nizwa in Oman.
PBA Infrastructures received contract worth Rs 78.60 crore (Rs 786 million) from Navi Mumbai Municipal Corporation for the construction of Thane-Belapur road.
The PBA Infrastructures stock has appreciated by 27 per cent to Rs 143.40 in last two days. Simplex Infrastructure - which has secured a total contract of Rs 325 crore (Rs 3.25 billion) from NHAI, government of Manipur and Rail Vikas Nigam - has gained 16 per cent to Rs 1,735.50 in last two days.
Era Constructions has secured contract worth Rs 47.45 crore (Rs 474.5 million) from BHEL for all civil structural and architectural work for expansion of its Bhilai power project. It has appreciated by 28 per cent in last one week to Rs 223.