Markets extended gains on Thursday to end near their day's high, amid a surge in late trades, led by ITC, software and financial shares.
The 30-share Sensex ended at 19,414 up 161 points or 0.84% and the 50-share Nifty ended at 5,863 up by 45 points or 0.77%.
The Sensex and the Nifty touched an intra-day high of 19,465 levels and 5,878 mark, respectively.
On the global front, Japan's Nikkei average rose to a 4-1/2-year high for a second day in a row on Thursday, boosted by expectations of more aggressive monetary policy, though the index failed to close above the key 12,000-mark.
The Nikkei ended 0.3 percent higher at 11,968.08 points, extending its winning streak to six straight sessions, after climbing as high as 12,069.60 earlier in the day.
European shares edged up in early trade on Thursday, leaving key indexes hovering around multi-year highs and with investors forecasting more market gains in the medium term.
The pan-European FTSEurofirst 300 index, which had reached a 4-1/2 year intraday high of 1,193.35 points on Wednesday, rose 0.1 percent to 1,187.61 points by 0807 GMT.
Back home, the rupee recovered from initial losses but was still quoting lower by three paise at 54.75 on mild dollar demand from banks and importers on the back of firm global cues.
On the sectoral front, BSE Realty, IT and Capital Goods indices surged by almost 2% followed by counters like TECk, Banks, Auto, Healthcare and FMCG, all gaining by nearly 1% each. Howevver, BSE Metal and Consumer Durable indices declined between 0.5-1%.
Shares of software exporters gained on signs of improving business sentiment in the US. Software majors earn most of their revenue from exports to the US.
Infosys and Wipro touched their 52-week highs, while HCL Technologies and TCS were quoting at their historic highs on BSE.
Among the individual stocks, Infosys ended at 1.29% at Rs 3,005, its highest level since April 2011 on BSE.
The stock gained 3.3% in past three trading sessions after the company announced that it plans to add approximately 200 new jobs in the next fiscal year at its Cumberland location in Cobb County, and expects additional expansion in the metro Atlanta area over the next couple of years.
Wipro too, was trading at its highest level since April 2011, ended up nearly 2% at Rs 449, extended its 5.3% rally in past two
ITC rebounded by 1.5% on buying at lower levels after the stock witnessed correction post the Budget which proposed 18% excise duty hike on cigarettes.
Bank shares gained on hopes of credit growth revival after global ratings agency Moody’s said on Thursday that the worst might be over for India in 2014 by the economic growth bouncing back to 7%.
The ratings agency pushed India's 2013 GDP forecast to 6.2% from 5.1%. HDFC Bank and ICICI Bank surged between 1-2%.
From the Capital Goods space, L&T and BHEL surged between 1-3%.
Hero Moto Corp was the top Sensex gainer, up over 4%. Kotak Institutional Equities upgraded Hero MotoCorp Ltd to "add" from "sell", and maintained its "reduce" rating on Bajaj Auto.
Kotak says it changed its preferred pick to Hero in the two-wheeler segment given Hero's valuation discount to Bajaj Auto. The brokerage also expects Hero to post higher earnings growth than Bajaj.
DLF ended higher by 4% after its board approved the issuance of fresh equity shares to dilute promoter group holding in the company to meet Sebi norms of 25% minimum public shareholding.
On the losing side, JSPL, HUL, CIL, Tata Motors and Tata Steel slipped between 1-2%.
Meanwhile, BSE Midcap and BSE Smallcap indices gained between 0.5-1%. The market breadth in BSE ended marginally positive with 1,524 shares advancing and 1,305 shares declining.
SMART MOVERS Lovable Lingerie surged over 8% in BSE after the company said one of its promoter bought additional stake in the company through open market purchase.
Rollatainers was locked in 8% upper circuit at Rs 203 on BSE after the containers and packaging company signed a Joint Venture Agreement with Toyo Machine Manufacturing Company Limited to develop, design, assemble, manufacture, produce industrial machines and spare parts for production packaging and printing machines for all kinds of consumer and industrial products in India and to market, sell and service the products throughout the territory.
Elder Pharmaceuticals rallied almost 5% to Rs 335 after the company said that it will form a joint venture company with the Japanese cosmetics major, Kose Corporation to manufacture and market cosmetic products for Indian market.
Shares of Multi Commodity Exchange of India ended lower by 4% on reports that the NYSE Euronext will sell its entire stake in the country's largest commodity exchange via block deal on Thursday.