Jakarta stocks rose 1.8 percent on Wednesday to their highest close ever, helped by buying in blue chip companies and a further decline in the interest rate on central bank certificates (SBI).
The Jakarta Composite Index jumped 13.4 points to 756.563, smashing the previous record close on Friday.
Trade was heavy at 1.04 trillion rupiah ($124.8 million) with gainers outnumbering losers 104 to 29 while 78 shares were unchanged.
"The sharp decline in SBI interest rates has provided positive sentiment for the market," said Norico Gaman, an analyst at BNI Securities.
The rate on the one-month central bank papers fell 18 basis points 8.06 percent, well below the 8.16 percent average market forecast, in an auction on Wednesday.
Among the gainers were the country's second-largest phone firm, PT Indonesian Satellite Corp Tbk, which rose 1.52 percent to 16,750 rupiah.
Some analysts had said the company's forecast of a five percent increase in market share and its plan to launch a fixed-wireless operation this year could have a positive impact on its shares.
Other shares which gained some ground were the country's largest bank, PT Bank Mandiri Tbk, and fourth-largest PT Bank Rakyat Indonesia Tbk.
Mandiri closed up 4.17 percent to 1,250 rupiah, while Bank Rakyat rose 5.08 percent to 1,550 rupiah.
Expectations that domestic interest rates will continue declining boosted buying in banks as many analysts expect them to enjoy better net interest margins. The rupiah currency was being quoted at 8,338/8,343 to the dollar late on Wednesday.