The Sensex closed above the key 60,000 level for the first time in over four months as the bull run in Indian equities extended into the fifth straight week on Wednesday as the easing pace of inflation and strong earnings drove gains.
The 30-share BSE index jumped 417.92 points or 0.70 per cent to settle at 60,260.13. During the day, it climbed 481.04 points to 60,323.25.
The broader NSE Nifty went higher by 119 points or 0.67 per cent to close at 17,944.25.
“Bulls on Dalal Street kept the momentum going as Sensex zoomed past the psychological 60,000-mark and Nifty inched towards 18000 level on the back of softening inflation and strong FII buying in the current month," said Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities.
"While global factors remain hazy, India is seen as a bright spot in today's challenging times," he added.
From the Sensex pack, Bajaj Finserv, Bajaj Finance, Bharti Airtel, Tech Mahindra, HCL Technologies, NTPC, Wipro and Hindustan Unilever were the biggest gainers.
On the other hand, Mahindra & Mahindra, Maruti, UltraTech Cement and Power Grid were among the laggards.
A softer-than-expected inflation reading on Friday has raised hopes that the Reserve Bank of India may scale back on the pace and quantum of its rate hikes in the coming months.
"There is comfort that aggressive rate hike cycle might just get over with one or two more cycles," Siddharth Khemka, head of retail research at Motilal Oswal Financial Services, told Reuters.
"The stance (by global central banks) may become softer gradually, and market is hoping for a softer landing, which is boosting sentiment across the world."
Strong corporate June-quarter results, softening commodity prices and easing of consumer inflation has helped domestic mood, particularly in consumer and auto stocks, Mr Khemka added.
Positive investor mood was also boosted by a recent influx of foreign capital into the Indian capital markets.
The latest bull run in Indian stocks is now in its fifth straight week, with gains of about 11 per cent over the previous four weeks, the benchmark indexes have recouped all of their losses in 2022.
"Consistent participation by FIIs is the backbone of the current rally in the domestic market. This reversal in the FII trend is owed to the resilience showcased by the Indian economy even as inflation continues to plague the western markets," Vinod Nair, Head of Research at Geojit Financial Services, told PTI.
"Declining commodity and oil prices also instilled confidence in foreign investors," he added.
Foreign Portfolio Investors (FPIs) had been consistently selling Indian stocks until early July due to a variety of factors, such as tightening monetary policy in advanced economies, rising demand for the dollar, and strong returns from US bonds.
However, they turned net buyers in July, investing Rs 4,989 crore in a total amount of stock and have remained that way this month.
According to the latest data, they have already purchased stocks worth around Rs 22,453 crore in August.