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The BSE Sensex and Nifty rose on Thursday to their highest close in nearly two-and-a-half weeks as blue-chips such as ICICI Bank Ltd gained, tracking higher Asian stocks as soft economic data globally kept up hopes of continued stimulus from central banks.
The broader Nifty was just 0.6 per cent shy of the record high of 7,841 hit on July 25.
An economic contraction in Japan, a shock fall in Chinese loans, a surprisingly dovish turn by the Bank of England and a sluggish reading on US retail sales all combined to make any tightening in policy seem a distant prospect.
Also, India's wholesale price inflation eased to a five-month low in July, helped by a moderation in fuel costs.
Foreign investors, largely responsible for shares hitting record highs late last month, bought stocks worth Rs 71.8 crore ($117.6 million) on Wednesday, boosting sentiment, according to provisional exchange data.
Markets are closed on Friday for the Independence Day holiday but traders would be looking forward to newly elected Prime Minister Narendra Modi's speech for clues to his reform plans for the world's largest democracy.
"The market needs commitment and I think Modi will deliver that in the key areas of infrastructure and capex revival," said Deven Choksey, managing director at K R Choksey Securities.
The Nifty rose 0.67 per cent, or 52 points, to end at 7,792, marking its highest close since July 24.
Both the indexes added around three per cent for the week, also their first gains in three.
Blue-chips led the gainers with ICICI Bank up two per cent, while engineering company Larsen & Toubro finishing two per cent higher.
Tata Motors rose two per cent, while Sesa Sterlite ended three per cent higher.
Upbeat earnings also helped some companies. Oil and Natural Gas Corp gained two per cent after April-June operating earnings beat estimates.
Voltas surged nine per cent after quarterly results came in above market expectations.
Lanco Infratech gained five per cent, while Adani Power Ltd rose three per cent after Lanco said on Wednesday it had sold a power plant to Adani for $327 million to cut debt.
BEML Ltd bucked the trend, falling by its daily limit of five per cent for the second consecutive session after April-June net loss widened from a year earlier.
