Upbeat foreign investors on Tuesday pushed the Bombay Stock Exchange benchmark Sensex above the 20,000 points-mark for the first time in 32 months, as they bet on companies that are driving the Indian growth story.
The barometer closed 95.45 points, or 0.48 per cent, up at 20,001.55 - its best since January 15, 2008, when the index ended at 20,251.09 points.
Similarly, the 50-share National Stock Exchange benchmark Nifty breached the psychological 6,000-mark and ended at 6,009.05, up 28.6 points, or 0.48 per cent.
Some brokers, however, feel a short-term correction may be round the corner, but would nonetheless provide good investment opportunities.
Happy with the market milestone, Finance Minister Pranab Mukherjee told reporters in New Delhi: "We all know the Sensex is always a little bit unpredictable. (But) I am happy that for the first time after January 2008, it has crossed 20,000."
Analysts said the rally in Indian market is propelled by strong inflows from overseas fund houses, which have made a net investment of over Rs 71,000 crore in local stocks so far, in this year.
"Sensex gushing past 20,000-mark stands testimony to the attractiveness of India as a preferred investment destination. With Indian economy structurally well placed for an 8 to 9 per cent gross domestic product growth over a long period, domestic equities are in a structural bull run," Angel Broking CMD Dinesh Thakkar said.
Tuesday's close marked the third straight session of gains.
Significantly, the Sensex has completed its journey from 17,971 points on August 31 to 20,000 in just 15 trading days.
Tuesday's gain was fuelled by a smart gain in blue-chips like Larsen & Toubro, HDFC, HDFC Bank, TCS, Infosys and BHEL.
Infosys rose 0.9 per cent, TCS 2.5 per cent and Wipro 2.7 per cent. Equity analysts said IT stocks rose after IBM Corp announced a $1.7-billion takeover.
L&T zoomed 2 per cent, Cipla 1.92 per cent and BHEL 1.73 per cent. With a net gain of 2.93 per cent, Tata Power was the best performer in the Sensex pack.
In the BSE-30 pack, 16 stocks ended with gain, while the rest closed in the red.
Even in the broader market, 2,123 stocks declined against 883 advances.
Reliance Industries Ltd, which holds the maximum weight in the Sensex, acted as a drag, closing 0.60 per cent lower at Rs 1,033.5.
ITC plunged 2.58 per cent and led the losers' pack. Other major losers include Jaiprakash Associates (1.52 per cent), DLF (1.38 per cent) and Hindalco (1.22 per cent).
Asian stocks rose after US homebuilder Lennar Corp posted better-than-estimated profit, boosting optimism in the economic recovery worldwide.
US stocks advanced on Monday, sending the S&P 500 Index to a four-month high on Lennar Corp's profit forecasts and IBM Corp announcing a $1.7-billion takeover.
Sensex extended gains ahead of the US Federal Open Market Committee meet tonight. The upswing was led by the IT, telecom and capital goods stocks.
Triple digit gains in the US and strong rebound in the European markets acted as sentiment booster, brokers said.
"It would be wise to be a bit cautious at this stage, as the recent surge has been a little too fast (though not as fast as November 2007) and therefore calls for some consolidation," a broker said.