Indian stocks hit their highest level in nearly three weeks on Wednesday in the absence of foreign selling pressure ahead of year-end holidays, and following overnight gains on Wall Street after data showed the US economy grew at a healthy clip in the third quarter.

The 30-share BSE index Sensex surged 259.65 points or 1.01 per cent to 25,850.30, its highest close since December 3 and the 50-share NSE index Nifty jumped 79.85 points or 1.03 per cent to 7,865.95, its highest close since December 2.

Barring consumer durables, all other BSE sectoral indices ended in the green. Among them, metal index gained the most by 1.87 per cent, followed by oil & gas 1.47 per cent, healthcare 1.38 per cent and power 1.3 per cent. On the other hand, consumer durables index was down 0.27 per cent.

Top five Sensex gainers were GAIL (+5.82%), BHEL (+3.58%), Sun Pharma (+3.52%), Bharti Airtel (+2.72%) and Tata Steel (+2.53%), while the major losers were M&M (-0.45%), Hero MotoCorp (-0.25%), Adani Ports (-0.21%), Asian Paints (-0.18%) and Bajaj Auto (-0.05%).

Foreign investors, who have been net buyers so far this year, have sold about $689 million worth of equities this month.

With little less than 24 per cent of ownership of Indian shares, their absence has reduced selling pressure on domestic markets, according to analysts.

"Generally FIIs have been sellers, their absence has given the market reason to be steady to high," said Deven Choksey, managing director at KR Choksey Securities.

"Only few stocks are giving the market some kind of rally or thrust, but fundamentals have not changed."

Wall Street rallied across the board on Tuesday after the U.S. Commerce Department said gross domestic product grew at a 2.0 per cent annual pace, instead of the 2.1 per cent rate reported last month.

A report by SMC Global said: "Asian equity markets followed their Wall Street peers higher on Wednesday as investors cheered strong US data, a pause in the greenback's rally and higher oil prices. Markets in Japan are shut for the Emperor's Birthday. Overnight, the Dow Jones Industrial Average jumped nearly 200 points after the final estimate for US third quarter gross domestic product was revised down to 2 per cent from a previous 2.1 per cent, but that still beat expectations for a 1.9 per cent reading. Existing home sales in the US fell by much more than anticipated in the month of November, according to a report released by the National Association of Realtors on Tuesday, with sales plunging to their lowest level in well over a year. NAR said existing home sales tumbled 10.5 per cent to an annual rate of 4.76 million in November from a downwardly revised 5.32 million in October. Economist had expected existing home sales to edge down to a rate of 5.32 million from the 5.36 million originally reported for the previous month."

Brokers said a fresh spell of buying triggered by a firming trend at other Asian bourses following overnight gains in the US in the wake of upbeat data on growth and consumer spending buoyed the sentiment.

Besides, the current account deficit (CAD) narrowed to 1.6 per cent of GDP at $8.2 billion in the second quarter ended September, which too was lapped up, they said.

European shares rose on Wednesday, lifted by gains in the mining sector on the back of stronger copper prices and signs of more Chinese economic stimulus measures.

Read more Asian shares edged higher on Wednesday following a modest bounce on Wall Street, while the dollar drifted lower and oil found some relief from recent relentless selling.

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Wall Street climbed on Tuesday, buoyed by energy shares as sliding oil prices stabilised and by fairly healthy data on US economic growth, while the dollar fell for a third consecutive session.

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