Indian equity benchmarks soared to a five-month high on Tuesday, extending their winning streak for the fourth straight session, with the Nifty index above 18,000 points level for the first time since April and the Sensex holding at over the 60,000 mark, tracking a broad global rally in risk assets.
The 30-share BSE Sensex index rose over 450 points, and the broader NSE Nifty-50 index jumped 0.75 per cent.
With a 0.37 percent decline, TCS was the Sensex pack's largest loser.
Bajaj Finserve, IndusInd Bank, Bharti Airtel, Titan, and Bajaj Finance were the top gainers among the Sensex stocks. Additionally closing in the black were HDFC Bank, HDFC, Power Grid, L&T, ITC, Reliance, SBI, and Infosys.
Those gains overshadowed the double whammy for India, slowing industrial output and increasing consumer price index-based inflation (CPI) to 7 per cent in August after falling for three months.
The central bank may be under pressure to raise interest rates again this month due to higher-than-expected inflation.
"A weak industrial print and CPI above the RBI's comfort zone are being weighed against continuous foreign investor buying, weak oil prices and a weakening dollar index," said Ajay Bodke, an independent market analyst.
"Risk aversion towards emerging markets is receding," Mr Bodke added.
According to information available on the BSE, foreign institutional investors (FIIs) invested Rs 2,049.65 crore in domestic shares on Monday.
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, told PTI that the ongoing market rally is primarily driven by the sudden reversal of the FII strategy.
"Retail investor support and fundamental support to the market from a strong economy are aiding the rally. Now, this has become a classic momentum-driven market which has the potential to take the indices to new record highs soon," he said.
Crude prices have fallen nearly a third since mid-June and back to levels before Russia invaded Ukraine late in February, trading below $100.
Ahead of US inflation data which is predicted to show the ferocious rise in prices may finally be cresting, world markets were up for a fifth straight day on Tuesday, and the dollar was on track for its longest losing streak in a year.
"The good news for the markets is that a sliding US dollar is likely to further add to risk appetite," said Prashanth Tapse, Senior Vice President for Research at Mehta Equities.
"A new bull market could start if the US inflation report, which is expected to be announced in the evening, comes below the streets' expectation," he added.
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