Equity benchmarks ended Friday on a high, extending gains for a fourth straight week and marking the longest winning streak since January, tracking a broader risk assets rally globally, even as oil prices were set for a week of gains and trading near $100 a barrel.
While Indian bourses started in the red, the 30-share Sensex index rose 130.18 points, or 0.22 per cent, to 59,462.78 and the NSE Nifty ended with gains of 39.15 points, or 0.22 per cent, to 17,698.15.
A largely positive trend in global equities and foreign capital inflows also supported the domestic equity markets, traders said. However, IT and healthcare stocks remained a drag on the indices, they added.
Brokers said investors picked up fundamentally strong stocks ahead of IIP (Index of Industrial Production) and Consumer Price Index (CPI) inflation numbers to be released after market hours on Friday, according to PTI.
NTPC was the top gainer in the Sensex pack, climbing 3.26 per cent, followed by Tata Steel, PowerGrid, ICICI Bank, Reliance Industries, SBI and ITC.
On the other hand, Infosys, Maruti, L&T, Tech Mahindra, Sun Pharma and HUL were among the laggards, sliding as much as 1.56 per cent.
All eyes will be on retail inflation data to be released at 5.30 pm and whether there will be any follow-through dollar demand ahead of a long weekend, with markets closed on Monday for Independence Day celebrations.
"Equity markets continued to rally with resilient performance during the week. Key bench mark indices like BSE-30 and Nifty-50 has given positive returns this week," said Shrikant Chouhan, Head of Equity Research for Retail at Kotak Securities.
The market rally has been broad based with gains seen in BSE Midcap, BSE Smallcap and majority of sectoral indices. Sectoral index performance was led by BSE Metals and BSE Capital Goods indices, whereas some defensive sectors underperformed the broader market," said Mr Chouhan.
"Global equity markets continued their strong rally, as the US CPI moderated in July. In India, FPIs flows were positive this week. With Q1FY23 result season coming towards close, market focus will shift towards macro factors that includes inflation, Central Bank rate action, oil prices and recession concerns in key economies globally," he added.
Domestic bourses tracked world stocks, which were headed for a fourth straight week of gains as investors scaled back views on how far US interest rates and inflation can climb.
This week, a minor lowering of inflation readings helped boost global markets. Still, several Fed speakers dimmed hopes that the central bank would go cautiously with future policy tightening.
"Inflation seems to have turned, and that was positive; the growth stocks are outperforming again," Matthias Scheiber, global head of portfolio management for multi-asset solutions at All spring, told Reuters.
"I wouldn't be surprised if we have a good finish into the weekend," he added, though he said investors remained cautious.
MSCI's world stock index was up 0.1 per cent and showed a 1.8 per cent rise on the week. S&P futures gained 0.53 per cent after the S&P index closed down 0.07 per cent in the previous session.
European stocks rose 0.35 per cent and were heading for weekly gains of more than 1 per cent. Britain's FTSE climbed 0.56 per cent and was eyeing a near 1 per cent rise on the week.
The odds of a US rate hike of 75 basis points in September were as high as nearly 70 per cent early this week but are presently hovering around 35 per cent, where they were a week ago.
"There are too many uncertainties to know the path of oil and other CPI prices ahead, but the peak of inflation is clearly behind us," Nikko Asset Management chief global strategist John Vail wrote in a note.
"The key question is how far and how fast it will fall. We believe inflation will be quite sticky, and central banks need to be more hawkish than consensus."
Oil prices were down slightly on Friday but were set to rise on the week as recession fears eased through an uncertain demand outlook capped gains.