The NSE's Nifty rose on Wednesday, inching up close to a record high, as investors bought shares in under-performing sectors such as drug makers and state-run lenders, while sentiment was also supported on easing North Korea tensions.
The NSE index was on track for its fifth consecutive daily increase, and was steadily recovering from an about 1.6 per cent fall in August.
The gains would likely be extended in the near term, analysts said, although advances would be tempered by caution over global risk factors and the domestic economy.
Data late on Tuesday showed India's consumer price inflation rose more than expected to a five-month high of 3.36 per cent, dampening chances of a rate cut by the central bank at its policy review next month.
The UN Security Council voted unanimously to boost sanctions on North Korea on Monday, but a tougher initial US draft was weakened to win the support of China and Russia, both of which hold U.N. veto power.
“The Korea tensions have eased and the markets are near all time high,” said A.K. Prabhakar, head of research at IDBI Capital Markets & Securities Ltd.
“Nifty (NSE index) could breach its record high by today or tomorrow.”
The broader NSE index was up 0.30 per cent at 10,123.05 as of 1.10 pm, not far from its record high of 10,137.85 hit on August 2.
The benchmark BSE index was 0.46 per cent or 148.65 points higher at 32,307.31.
Shares of drug makers, which have been among the big losers this year, climbed on Wednesday, with Sun Pharmaceutical Industries Ltd up 2.1 per cent, and Dr.Reddy's Laboratories Ltd rising 2.3 per cent.
The Nifty Pharma index fell 13.7 per cent as of August-end, but has gained about 3 per cent so far this month.
Bank shares also gained on hopes of additional capital infusion from the government, with Bank of India Ltd and Union Bank of India Ltd up more than 2 per cent each.
The Nifty PSU Bank index has recovered slightly this month after slumping 11.6 per cent in August.
Among other gainers, shares of Reliance Industries Ltd climbed more than 4 per cent to hit a record high, while financial firm Capital First Ltd hit a more than 9-year high after India's banking regulator raised its foreign investment limit to 50 per cent.
Foreign portfolio investors (FPIs) sold shares worth a net Rs 1,230.74 crore yesterday, as per provisional data released by stock exchanges.
Domestic institutional investors (DIIs) bought shares worth a net Rs 1,313.08 crore as per provisional data.
Overseas, most Asian stocks were trading lower. All three major US stock indexes booked all—time closing highs yesterday. It marks the first time all three benchmarks finished at records on the same day since 26 July 2017.