Indian shares gained for a second consecutive session on Tuesday, with the NSE index hitting its highest in nearly 11 months, on the back of encouraging US data and expectations of further monetary stimulus from global policymakers. The broader NSE index ended up 0.63 percent at 8,521.05, after earlier reaching its highest level since August 17, while the benchmark BSE index closed 0.66 percent higher at 27,808.14.
The gains come a day after the US benchmark S&P 500 stock index set record intraday and closing highs, as last week's strong monthly US jobs report worked its way into financial markets. Meanwhile, the strong likelihood of a goods and services tax bill being passed in the monsoon session of parliament, which starts on July 18, and hopes for a good start to the quarterly earnings season also boosted investor sentiment.
Gains in share markets also tracked a rally in government bonds, as debt investors bet on benign inflation data later in the day and awaited the government's announcement on the next central bank governor.
"Markets are rallying on positive global cues, coupled with optimism for this earnings season, healthy monsoon progress and factoring in hopes for the GST bill getting through," said Neeraj Dewan, director at Quantum Securities Pvt Ltd.
"However, as caution prevails among investors ahead of these key events, we can expect to see a small amount of profit-taking for now, with larger chunks expected, probably a 100 points, down the line," Dewan added.
Banks were among the top gainers, with major private sector banks pushing the Nifty Bank Index up 0.81 percent. ICICI Bank Ltd was up 2.78 percent, Federal Bank Ltd was up 2.2 percent while Axis Bank Ltd gained 1.58 percent.
"Private-sector banks are likely to continue to see healthy growth and gain significant loan market share," HSBC analysts wrote in a note, estimating a 21 percent loan growth for private banks.
Among other gainers, staffing firm Quess Corp Ltd's surged 60 percent in a strong market debut.
Aluminium giant Hindalco Industries rose to an over one-year high on rival Alcoa Inc's upbeat earnings. Meanwhile, Coal India Ltd was the top percentage loser on both indexes, falling as much 2.4 percent on lower-than-expected buyback plan.