India's key share index rose for a second straight day on Wednesday to a fresh closing high, bolstered by expectations that companies will post healthy quarterly earnings and attract more foreign investment.
The rupee ended lower against the dollar on suspected central bank intervention, but traders remain bullish on hopes of more foreign money flowing into the buoyant stock market.
Foreign funds invested more than $400 million in Indian shares between January 1 to 12, compared with a record $6.7 billion in all of 2003, when the Bombay index leapt by more than 70 percent to end up Asia's second best performer.
On Wednesday, the 30-issue Bombay share index closed one percent higher at 6,194.11 points, passing the previous best logged on Tuesday and taking gains in the last two sessions to more than two percent.
Wednesday's gains were led by banks, as traders bet a booming economy will lead to a pick-up in demand for corporate loans.
India's farm-dependent economy is forecast to grow by more than seven percent in the year to March, helped by heavy rains.
State Bank of India, the nation's biggest commercial bank, jumped 4.4 percent to 674.50 rupees and Punjab National Bank jumped 3.2 percent to 302.30 rupees.
Cement stocks gained on expectations of strong demand and higher prices, as construction activity booms in Asia's third largest economy.
Grasim Industries Ltd, the nation's number three cement maker, gained 2.9 percent to 1,196.65 rupees and Larsen & Toubro Ltd, the industry leader, gained about two percent to 589.85 rupees.