Stocks rose to fresh life-time closing high levels on optimism over earnings, growth and upcoming budget, with the benchmark BSE Sensex jumping 199 points to end at record 34,352.79 and Nifty scaling the 10,600 mark for the first time.
Gains in key IT, capital goods, healthcare and metal stocks after consistent buying by domestic and foreign investors helped both the key indices to scale new peaks.
The 30-share Sensex opened higher and continued its upward march to touch a new intra-day record high of 34,385.67, surpassing its previous high of 34,188.85 hit on January 5.
But it lost some ground due to profit-booking and settled up by 198.94 points, or 0.58 per cent, at 34,352.79 -- its all-time closing high. The Sensex bettered its previous record of 34,153.85 touched on January 5.
Similarly, the broader 50-issue NSE Nifty hit a new intra-day high of 10,631.20, smashing its previous record of 10,566.10 hit on January 5.
However, he index shed some grounds to close at 10,623.60, still a new closing high, up by 64.75 points or 0.61 per cent. It broke the previous record of 10,558.85 reached on January 5.
"Supportive global market and optimism ahead of earnings season took the market to a new high. A cut in FY18 GDP growth estimate by CSO did not impact the movement since it was overtly conservative. Revival in earnings, incremental QoQ growth in GDP and Budget expectations are sustaining the momentum," Vinod Nair, Head of Research, Geojit Financial Services Ltd.
The CSO on Friday said that India's growth is likely to slow down to 6.5 per cent in 2017-18 against 7.1 per cent in 2016-17 and 8 per cent in the preceding year mainly due to impact of GST on manufacturing and subdued farm output.
"Sentiments were also boosted by the positivity from global peers and expectations on the upcoming union budget, anticipating reforms for fiscal consolidation and enhancements in rural spending. Recovery in dollar rode the pharma and IT stocks higher," Anand James, Chief Market Strategist, Geojit Financial Services said.
Foreign portfolio investors (FPIs) have been supporting the ongoing rally in the new year by pumping in sizeable money into the market. FPIs bought shares to the tune of Rs 581.43 crore while domestic institutional investors (DIIs) purchased shares worth a net Rs 243.13 crore last Friday, as per provisional data from the stock exchanges.
Coal India was the best gainer among Sensex components by surging 3.26 per cent, followed by Infosys 2.33 per cent and Sun Pharma by2.28 per cent to Rs 591.95.
L&T too showed strength and ended 1.80 per cent higher after the company said its construction arm has won orders worth Rs 2,265 crore from Andhra Pradesh Capital Region Development Authority.
Other big gainers include Hero MotoCorp, IndusInd Bank, ITC Ltd, Hindustan Unilever, HDFC Ltd, Wipro, Tata Motors, Reliance Industries, ICICI Bank, M&M, Kotak Bank, Maruti Suzuki, Yes Bank, Power Grid and HDFC Bank, rising by up to 1.37 per cent.
In contrast, Bharti Airtel, ONGC, SBI, Tata Steel, Adani Ports and Dr Reddy's ended lower on profit-booking.
Among sectoral indices, IT stayed in the lead by surging 1.40 per cent, followed by capital goods index 1.22 per cent, healthcare 1.20 per cent, realty 0.87 per cent, metal 0.78 per cent, FMCG 0.78 per cent, oil & gas 0.67 per cent, teck 0.66 per cent and infrastructure 0.39 per cent.
While telecom index ended 2.64 per cent lower as investors booked profits at higher levels.
The market rally lifted the mid-cap index by 0.98 per cent and small-cap 0.97 per cent.
In the Asian region, Shanghai Composite gained 0.52 per cent while Hong Kong's Hang Seng rose 0.28 per cent. Financial markets in Japan remained shut for a public holiday.
In the Eurozone, markets were trading higher in their early deal, tracking a broadly upbheat session in Asia. Paris CAC 40 rose 0.17 per cent, while Frankfurt's DAX was up by 0.19 per cent in late morning trade. London's FTSE, however, shed 0.13 per cent.