Benchmark equity indices BSE Sensex and NSE Nifty scaled their fresh lifetime highs of 38,321.95 and 11,562.95, respectively, on Monday.
Buying in index heavyweights including Larsen & Toubro, Reliance Industries and financial stocks supported the bulls.
At 2 pm, the 30-share Sensex was trading 353 points at 38,301, while the NSE Nifty was at 11,554, up by 85 points.
Here are five key reasons that fuelled the rally on Dalal Street today:
Easing trade war tensions
Sustained global markets aided benchmark equity indices back home. The US markets ended higher on Friday, as optimism that the US and China will eventually resolve their trade standoff offset fears about Turkeys currency crisis. Dow Jones Industrial Average index closed 0.43 per cent up at 25,669.32 on Friday.
Asian peers including Hang Seng and Shanghai index were up over 1 per cent on Monday.
Robust growth outlook
Sentiment remained upbeat with former chief economic advisor Arvind Virmanis statement that Indias economic growth seems to be back on a recovery path and the country will be on a firm 7.5 per cent plus growth track this fiscal. He also said the US-China tariff war provides an opportunity to increase Indias exports to the US.
Traders also took some encouragement with the Central Board of Direct Taxes (CBDT) statement that income Tax collection in the country stood at a record Rs 10.03 lakh crore during 2017-18. It also said during 2017-18, a record number of 6.92 crore I-T returns were filed, which was 1.31 crore more than 5.61 crore returns filed in 2016-17.
Gain in rupee
Some recovery in the local currency also cheered market sentiment. The rupee recovered from all-time low by rising 53 paise to 69.63 against the US dollar at around 2 pm on Monday on fresh selling of the greenback by exporters and banks ahead of US-China trade talks this week.
Comeback by FPIs
Foreign investors have pumped in over Rs 7,500 crore into the domestic capital markets so far this month on better corporate earnings coupled with improvement in crude oil prices.
The latest inflow comes following a net infusion of over Rs 2,300 crore in the capital markets, both equity and debt, last month. Prior to that, overseas investors had pulled out over Rs 61,000 crore during April-June.
Selective buying
Larsen and Toubro contributed around 100 points in the BSE Sensex rally on Monday till 2 pm (IST).
Other heavyweights including Reliance Industries, HDFC, HDFC Bank, Tata Motors and ONGC added up to 70 points in the 30-share index.
Shares of Larsen & Toubro rallied more than 6 per cent in morning trade on the bourses after the company said its board will meet on August 23 to consider a proposal for buyback of equity shares.
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