India's 50-share Nifty benchmark made a record high of 6,537.80 on Friday, surpassing its previous all-time peak of 6,415 hit on December 9 last year. The BSE Sensex jumped over 2 per cent or around 450 points and hit a record high of 21,960.89, marking its second consecutive day of hitting the milestone.
Markets closed near their all-time highs, indicating bullish sentiments on the Street. The Sensex ended at 21,920, up 406 points, while the Nifty advanced 125 points to close at 6,527.
(Read: Five reasons why Sensex, Nifty hit record high)
Steady buying by foreign investors has led to a strong rally in Indian markets. Overseas investors have bought heavily into India as a sharply narrowing current account deficit and a more stable rupee have increased confidence in a country that only last year was in the midst of its biggest market turmoil since the balance of payments crisis of 1991.
Foreign Institutional Investors (FIIs) bought Indian shares worth Rs 1,273 crore on Thursday, extending their buying streak to a 15th consecutive day for a net of over $1 billion. (Read: FIIs mark their biggest daily purchase since December 19)
Market analyst Sanjeev Bhasin told NDTV that Friday could see more gains though the real bull market could be witnessed in broader indices, where stocks have given almost 50-100 per cent returns from recent 3-month lows.
"Foreign flows have turned positive amid an easing in inflation, better cash management by the government with current account deficit hitting an 8-year low and the rupee rising to a 3-month high. All this has meant that India has outperformed the emerging markets," he added.
Technical analyst Sarvendra Srivastava, who has been bullish on markets for a long time, upgraded hits targets on Nifty to 6,700-6,800 levels.
The rupee also gained today, hitting a high of 60.95 per dollar. Mr Srivastava says the rupee is on its way to hit strengthening to 57 per dollar in the medium term. (Read: Rupee at new three-month high)
Analysts have also linked recent gains to a pre-election rally. The Sensex has gained in the month before elections in each of the previous six elections, with the biggest advance coming in 2009 when the Congress-led United Progressive Alliance won a majority, according to Reuters research.
Some analysts say investors should exercise caution amid the stock rally. Ridham Desai of Morgan Stanley warned of growing complacency in the market. (Read the full story here)
Among blue chips, real estate developer closed 9.7 per cent, while private lender ICICI Bank ended with 6 per cent gains. Pharma and IT stocks saw selling pressure tracking a strengthening in the rupee. (Track markets)
(With inputs from Reuters)
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