The BSE Sensex gained for the second day in a row, led by gains in stocks sensitive to interest rates on hopes that the RBI will be pressured into lowering interest rates after Finance Minister P. Chidambaram said high borrowing costs were burdening consumers.
Tata Motors rose 4.26 percent, ICICI Bank gained 2.13 percent, while DLF added 2.8 percent.
Software services exporters gain after U.S rival Cognizant Technology Solutions raised its adjusted full-year profit forecast.
Tata Consultancy Services gained 2.9 percent, while Infosys added 1.65 percent.
The Sensex rose 1.02 percent to 17590.95. The index earlier hit its highest level since April 3.
The 50-share Nifty gained 1.03 percent to end at 5336.70 points.