The benchmark Sensex on Friday crossed record 23,000 level for the first time but closed a tad lower at 22,994.23, posting its biggest single-day gain of 650.19 points since September 2013, on strong FII buying in banking, auto and power stocks ahead of election results next week.
In the day trade, the 30-share BSE barometer scaled its all-time high of 23,048.49 points as ICICI Bank, Tata Motors and Reliance Industries spurted.
The broad-based Nifty of the National Stock Exchange too spurted by 198.95 points, or 2.99 per cent to settle at record closing of 6,858.80. It touched an all-time intra-day high of 6,871.35 points, breaching previous record of 6,869.85 reached on April 25.
Both the indices posted their biggest single-session gains since September 19, 2013.
Buying activity gathered momentum as funds and investors were seen creating positions before the outcome of ongoing general elections next week.
"As the election D-day is approaching closer, the markets are rallying on anticipation of a favorable outcome," Dinesh Thakkar, Chairman & Managing Director, Angel Broking, said.
ICICI Bank rose the most by 6.63 per cent among Sensex scrips, while Tata Motors spurted by 5.57 per cent.
Hindalco (5.35 per cent), HDFC Bank (5.31 per cent) and BHEL (5.21 per cent) were among top five gainers among index stocks. Besides, ONGC (4.13 per cent), HDFC (4.07 per cent), RIL (3.93 per cent), SBI (3.88 per cent) and L&T (3.29 per cent) supported the rally.
A firming trend at other Asian bourses were other factors behind today's rally, brokers said.
In Sensex components, 27 stocks gained, while 3 declined.
The banking sector index gained the most by surging 5.34 per cent to 15,721.36 followed by realty index by 4.38 per cent to 1,420.52.
The power index rose by 4.12 per cent to 1,743.52 and PSUs index by 3.57 per cent to 6,767.66.
Prominent gainers of the day also included Axis Bank (4.87 per cent), ONGC (4.13 per cent), Maruti Suzuki 4.13 per cent, HDFC 4.07 per cent, Reliance Ind 3.93 per cent, Hero Motocorp 3.92 per cent, SBI 3.88 per cent, M&M 3.86 per cent, Tata Steel 3.64 per cent, Larsen 3.29 per cent and Bajaj Auto 2.56 per cent.
"Going into the next week,... focus will be firmly on the exit poll numbers due on Monday evening as well as on the final election results on Friday. A decisive verdict from the elections will be a long-term positive for the markets," said Zarbade.
Among BSE sectoral indices, bankex rose by 5.34 per cent, followed by realty 4.38 per cent, power 4.12 per cent, Oil&Gas 3.44 per cent, consumer goods 3.34 per cent.
"We believe markets will continue to have Modi wave.
Today's rally was led by financial. Bankex moving up by closer to 5 per cent, mainly led by renewed buying in private sector banks," said Rahul Shah, Vice President, Equity Advisory Group, Motilal Oswal Securities.
Small-cap and Mid-cap indices also rose by 0.72 per cent and 1.47 per cent respectively on good demand from retail investors.
The market breadth turned positive as 1,610 stocks finished with gains, 1,146 stocks ended with losses while 146 ruled steady. The total turnover rose to Rs 3,238.55 crores from Rs 2,299.87 crores yesterday.
Foreign institutional investors (FIIs) bought shares worth a net Rs 363.24 crore yesterday, as per provisional data from the stock exchanges.
Most Asian stocks ended higher. Key indices in Hong Kong, Singapore, South Korea and Japan ended higher by 0.12- 0.31 per cent, while indices in China and Taiwan eased by 0.21- to 0.46 per cent.
European stocks were trading lower. Key benchmark indices in France, Germany and UK eased by 0.41-0.54 per cent.