The market rebounded in last 30 minutes of trade to close at new life-time highs on late buying in Reliance Industries, HUL, Infosys and Hero MotoCorp. Extending their record run for the seventh day in a row, the Sensex and Nifty hit their fresh all-time highs of 37,644 and 11,366, respectively.
Later, the Sensex closed at 37,606, up 0.30% or 112 points. Nifty rose nearly 37 points or 0.33% to end at 11,356 level.
A recovery in rupee, unabated buying by domestic institutional investors (DIIs) and encouraging earnings by blue-chips contributed to the uptrend, brokers said.
Traders were cautious ahead of RBI's monetary policy outcome tomorrow.
Reliance Industries was the top gainer by climbing 3.14 per cent to close at record Rs 1,185.85. RIL today also regained its status as the country's most valued firm by market capitalisation (m-cap), replacing Tata Group's TCS from the top slot.
Hero MotoCorp rose by 2.77 per cent followed by HUL that ended 2.52 per cent higher on the Sensex.
Of 30 Sensex stocks, 18 closed higher.
Axis Bank was the top Sensex loser after the private lender reported 46 per cent fall in net profit for April-June quarter. The stock dropped 3.23 per cent to settle at Rs 550.10 on BSE. During the day, it went down by 3.59 per cent to Rs 548.
The company's market valuation diminished by Rs 4,708.84 crore to Rs 1,41,265.16 crore.
Axis Bank on Monday reported a 46 per cent fall in net profit to Rs 701.09 crore for June quarter due to increase in provisioning for bad loans.
The lender's asset quality worsened as gross non-performing assets (NPAs) rose to 6.52 per cent as on June 30 of this year, from 5.03 per cent on June 30, 2017.
VK Sharma, Head Private Client Group and Capital Market Strategy at HDFC Securities said, "Both the Nifty and the Sensex trotted to a new high for the fourth session running. The Nifty rose 37 points or 0.33% at 11,357. It was also the 7th day of positive advance decline ratios , a feat which has not been seen this calendar year. The markets were unusually confident ahead of the RBI Meet.
Even the fiscal deficit for the first quarter which accounted for 68.7% of the entire year did not bother the markets. The higher expenditure was on account of higher capital expenditure by 29% as compared to 22% of year ago. Last year, the quarter's deficit had accounted for around 80.8% of the annual deficit."
Bright Q1 earnings too improved investor sentiment.
Shares of IT services firm Tech Mahindra surged 4 per cent after the company reported 12.4 per cent rise in consolidated net profit for the first quarter ended June 2018.
The company's scrip gained 3.93 per cent or 25.70 points to close at Rs 680.30 on the BSE. Intra-day, it jumped 4.52 per cent to Rs 684.20.
On the NSE, shares of the company rose by 3.74 per cent to end at Rs 680.
Tech Mahindra reported consolidated net profit at Rs 897.9 crore for the first quarter ended June 2018 compared with net profit of Rs 798.6 crore in the corresponding quarter of the last fiscal.
Radhakishan Damani-led Avenue Supermarts' stock too closed higher by 3.77% or 60 points to 1,652 level on the BSE. The owner of retail chain D-Mart clocked a 43% rise in net profit to Rs 251 crore for the quarter ending June compared to Rs 175 crore net profit in the corresponding quarter of the previous fiscal.
Market breadth was positive with 1494 stocks closing higher compared with 1159 ending in the red on BSE. 155 stocks were unchanged.
Meanwhile, FIIs sold shares worth a net of Rs 234.04 crore on Monday, while DIIs bought shares worth a net of Rs 48.58 crore, provisional data showed.
For the month, Sensex rose 6.16%, while the Nifty 50 advanced 5.99%. BSE MidCap and SmallCap rose 0.33% and 0.66%, respectively.
World markets are mixed Tuesday ahead of key economic releases from the 19-country eurozone, which has come to an agreement with the US on holding off on new tariffs.
Britain's FTSE 100 rose 0.1 percent in early trading to 7,709.97 while Germany's DAX fell 0.2 percent to 12,767.07. France's CAC 40 shed 0.2 percent to 5,482.26. Wall Street was set for a subdued open, with Dow futures slipping less than 0.1 percent to 25,279. S&P 500 futures rose 0.1 percent to 2,805.70.
Markets were mostly higher after the Bank of Japan largely maintained the status quo while allowing some flexibility to achieve yield targets. Japan's Nikkei 225 index rose less than 0.1 percent to 22,553.72 and South Korea's Kospi added 0.1 percent to 2,295.26.
The Shanghai Composite index gained 0.3 percent to 2,876.40. Hong Kong's Hang Seng index bucked the regional trend, falling 0.5 percent to 28,583.01. Australia's S&P ASX 200 added less than 0.1 percent to 6,280.20. Shares fell in Indonesia but were higher in Taiwan and Singapore.
Written and edited by Aseem Thapliyal