The Sensex and Nifty ended with gains for a second straight session on Wednesday, after hitting a two-month high, tracking Asian peers ahead of US President-elect Donald Trump's news conference later in the day in which he will outline his policies.
The 30-share BSE index Sensex ended higher by 240.85 points or 0.9 per cent at 27,140.41 and the 50-share NSE index Nifty closed up by 92.05 points or 1.11 per cent at 8,380.65.
Both indexes hit their highest since November 11, 2016 earlier in the day.
Barring IT, all other BSE sectoral indices ended in the green. Among them, metal index surged the most by 4.42 per cent, banking 2.4 per cent, PSU 1.72 per cent and capital goods 1.39 per cent, while IT index was down 0.02 per cent.
Top five Sensex gainers were Coal India (+5.41%), Tata Steel (+3.99%), Lupin (+2.2%), L&T (+1.91%) and ICICI Bank (+1.79%), while the major losers were Bajaj Auto (-0.85%). ITC (-0.56%), Reliance (-0.28%), ONGC (-0.18%) and Infosys (-0.16%).
Among the top gainers were financial stocks which accounted for more than 50 per cent of the gains, with the Nifty Bank index rising as much as 1.58 per cent to its highest since December 9, 2016.
Shares of IndusInd Bank Ltd climbed as much as 4.64 per cent to its highest in two months after the company had on Tuesday reported a 29 per cent jump in December-quarter net profit to Rs 750 crores ($110.09 million).
Shares of Shiva Cement Ltd hit nearly a nine-year high after the company approved a potential sale of certain shares held by promoters to JSW Cement.
Asian markets
Asian shares pulled ahead to two-month highs on Wednesday, while the Nasdaq ended at another record high on Tuesday.
Trump's plan for tax cuts and infrastructure spending has boosted US shares but his protectionist statements during the election campaign have kept many investors guessing.
Investors were also growing hopeful that India's annual budget to be unveiled on Feb. 1 would contain incentives for companies to help prop up an economy being hit by a ban on higher-value cash notes.
“Global markets are moving into multi-year highs and Indian markets have underperformed in comparison,” said an analyst with broking firm Sushil Finance.
“Also, there is a possibility that budget expectations are getting built in.”
A report by SMC Global said: "India's auto sales saw their biggest monthly fall in 16 years in December due to demonetisation drive. Asian stocks opened higher following a surge in metal stocks after evidence of quickening price growth in China boosted metals and other commodities. Crude oil prices dropped to a one-month low. European stock markets, which had opened broadly lower, closed the day on a firmer note, while Wall Street shares closed mixed. US stocks have risen in the last two months in anticipation of easier fiscal policy based on Trump's campaign promises of increased infrastructure spending and tax cuts. Hiring increased for the month of November in the US, indicating a steady growth in the jobs market, according to data from the US Labor Department. The number of positions waiting to be filled rose 71,000 to 5.52 million which was in line with the forecast of 5.5 million. While hiring increased to 5.22 million from 5.16 million, the rate of hiring remained unchanged at 3.6 per cent."