The NSE index rose for the second successive session on Thursday to its highest since April 2015 as the domestic sentiment was lifted by positive earnings of companies such as Bharti Airtel.
Sustained foreign fund inflows and persistent buying by investors as the Cabinet had yesterday cleared changes in the GST Constituional Amendment Bill also boosted the sentiment.
Strengthening of rupee against the dollar and short-covering by participants with today being the last trading session of the July series of derivative contracts too supported the uptrend.
Shares also got a boost after the Federal Reserve said near-term risks to the US economic outlook had diminished, but gave no firm indication of whether it would raise rates at its next policy meeting in September.
The 30-share BSE index Sensex ended higher by 184.29 points or 0.66 per cent at 28,208.62 and the 50-share NSE index Nifty closed up 50.5 points or 0.59 per cent at 8,666.30.
Among BSE sectoral indices, consumer durables index was the star-performer and was up 2.3 per cent, followed by FMCG 1.5 per cent, realty 0.95 per cent and auto 0.81 per cent. On the other hand, capital goods index was down 0.84 per cent, metal 0.74 per cent and oil & gas 0.12 per cent.
Major Sensex gainers were Asian Paints (+6.14%), Maruti (+4.47%), ITC (+2.48%), Sun Pharma (+1.99%) and PowerGrid (+1.71%), while the major losers were L&T (-1.51%), Adani Ports (-1.38%), Tata Steel (-1.3%), Axis Bank (-0.98%) and Dr Reddy's (-0.93%).
Foreign investors have net bought Indian shares for 13 consecutive sessions as of Tuesday, bringing net purchases for the month to $1.3 billion and overall buying so far this year to $4.2 billion.
“We have witnessed multiple FII (foreign institutional investor) buying take place and the current trend in earnings is only acting as a catalyst,” said Rajesh Agarwal, director of research at Eastern Financiers.
The dollar took its biggest tumble in almost two months on Thursday and stocks crept to nine-month highs as cautious sounds from the US Federal Reserve left the focus firmly on Japan's next round of money-printing measures.
The dollar was down 0.7 per cent against six other major currencies after the Fed ended its meeting on Wednesday with little suggestion that it was in a rush to raise US interest rates.