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Top gainers on the 50-scrip benchmark index, Nifty, were Tata Motors, Bharti Airtel, Eicher Motors, SBI and Bajaj Finance, trading between 2.38 per cent and 8.62 per cent higher.
Led by a surge in Tata Motors shares, after the auto maker reported a 15.68 per cent growth in domestic sales for financial year 2018-19, the Nifty Auto settled 1.07 per cent higher. Tata Motors shares closed 8.62 per cent higher at Rs 203.50 on the NSE, and up 8.36 per cent at Rs 202.80 apiece on the BSE.
The advances to record levels came despite a market breadth that favoured declines. On the NSE, 826 stocks ended higher for the day, as against 899 that fell. Eleven out of the 19 sectoral gauges compiled by the BSE finished higher, led in percentage terms by the S&P BSE Auto (0.94 per cent), Telecom (1.54 per cent) and Realty (2.66 per cent) indexes.
Continued foreign fund inflows along with the announcement of another liquidity injection by the central bank supported the markets, say analysts.
Foreign institutional investors (FIIs) have been buying shares in the domestic equity markets. In March, they net purchased shares worth Rs. 33,980.56 crore, according to data from depository NSDL.
The Reserve Bank of India (RBI) had on Monday announced another round of dollar-rupee buy-sell swap worth $5 billion on April 23, marking the second such auction within a month. The dollar-rupee swap window adds liquidity into the system.
The swap window comes days ahead of the outcome of the Reserve Bank of India's bi-monthly policy review due on Thursday.
Analysts expect some consolidation in the markets in the near term.
"The upcoming RBI monetary policy would provide further direction to the markets. Soft inflation and muted domestic macro data have increased probability of a rate cut," said Jayant Manglik, president-retail distribution, Religare Broking. "On the global front, movement of crude oil prices and currency would remain on market radar."
More than 85 per cent of the nearly 70 economists polled by news agency Reuters expect the RBI to cut repo rate, its benchmark interest rate at which it lends short-term funds to commercial banks, by 25 basis points to 6.00 per cent on April 4.
(With agency inputs)