The 30-scrip Sensitive Index (Sensex) of the S&P Bombay Stock Exchange (BSE) surpassed its earlier recorded high of 28,360.66 points hit Nov 21, as parliament began its winter session.
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The 30-scrip Sensitive Index of the BSE opened at 28,413.01 points and closed trade at 28,499.54 points, up 164.91 points or 0.58 percent from the previous day's close at 28,334.63 points.
The Sensex touched a high of 28,514.96 points and a low of 28,394.48 points in intra-day trade.
"Thanks to the ongoing monetary soothsaying from the global central banks, risk appetite remains strong in global financial markets. High beta sector like metals, banks and real estate companies lead the upsurge in the equity market," said Anindya Banerjee, currency analyst for Kotak Securities.
"However, Indian Rupee has not been able to gain much from the exuberance in financial markets, as it weakened towards 62.00 on spot, on the back of US Dollar demand from PSUs (public sector undertakings) and rub-on effect of a strong US dollar overseas."
The markets were keenly watching any developments on further reforms like Goods and Service Tax (GST) and land acquisition norms that may be announced during the winter session.
The sentiments were also bullish on hopes of early passage of bills that aim to increase the cap on foreign capital participation in sectors like insurance.
Following international cues, markets were cheered by news emanating from China and Europe where stimulus programmes are going to be continued.
Healthy buying was observed in banking, information technology (IT), metal, capital goods and technology, entertainment and media (TECK), while selling pressure was seen in healthcare and fast moving consumer goods (FMCG) sectors.
The S&P bank index gained by 243.66 points, IT moved up by 202.70 points, metal index was up 182.79 points, capital goods index increased by 135.54 points and TECK index index rose 84.75 points.
However, healthcare stocks closed 66.60 points down, followed by FMCG index which dropped by 19.93 points.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) closed at a record high.
Nifty closed at a new high of 8,530.15 points -- up 52.80 points or 0.62 percent.
The major Sensex gainers were: Tata Power, up 4.14 percent at Rs.91.75; Hindalco Inds, up 3.37 percent at Rs.165.55; Infosys, up 3.08 percent at Rs.4,273.90; Tata Steel, up 3.00 percent at Rs.476.60; and ICICI Bank, up 2.25 percent at Rs.1,772.95.
The major Sensex losers were: Cipla, down 1.46 percent at Rs.617.95; Reliance Inds, down 1.29 percent at Rs.984.60; ONGC, down 0.76 percent at Rs.380.70; Tata Motors, down 0.73 percent at Rs.526.60; and Sun Pharma, down 0.64 percent at Rs.837.
Among other Asian markets, Japan's Nikkei index was up 0.33 percent, Shanghai's Composite Index was higher by 1.89 percent and Hong Kong's Hang Seng gained 1.95 percent.
In Europe, London's FTSE 100 was down 0.07 percent. However, France's CAC 40 was higher by 0.89 percent and Germany's DAX Index gained 0.74 percent.