Markets gathered pace in late trades after reports of talks between the Congress and the government fuelled hopes that the crucial Goods and Services Tax Bill is likely to be passed soon.
Further, the progress of the monsoon also aided sentiment.
The S&P BSE Sensex rose 127 points to end at 27,942 and Nifty50 gained 46 points to settle at 8,565.
In the broader markets, the BSE Midcap and Smallcap indices ended up 0.5%-0.7% each.
Market breadth was strong with 1593 gainers and 1097 losers on the BSE.
"The undertone is very strong. After a bit of consolidation markets seem to have gathered steam on hopes of the GST Bill getting passed while above normal rainfall has also boosted investor confidence," says G Chokkalingam, founder and managing director, Equinomics Research and Advisory.
According to the India Meteorological Department, the Southwest Monsoon has covered the entire country and rainfall so far has been 4% above normal.
Foreign institutional investors were net buyers in equities worth Rs 291 crore on Wednesday, as per provisional stock exchange data.
India's wholesale price index-based inflation rose to 1.62% in June on the back of higher food prices such as vegetables and fruits.
Food inflation was up at 8.18% in June from 7.88% in May, according to the official data released on Thursday.
On the global front, the Bank of England meets today and analysts expect it to lower its benchmark lending rate by a quarter of a percentage point to 0.25% to counter the fallout from the Brexit vote.
TCS, Cyient, Canfin Homes, Vimta Labs among others are scheduled to announce their quarterly results today.
ICICI Bank was the top Sensex gainer up 2.5%. The private banking major in a recent release said that S&P Global Ratings affirmed its 'BBB-' long-term issue ratings on the senior unsecured bonds issued by the Bahrain branch of ICICI Bank(foreign currency: BBB-/Stable/A-3).
Tata Motors ended up over 1%. The auto major has set its eyes on being among the top three global commercial vehicle makers and reclaiming its number three spot in the country’s car and sports utility vehicle market.
IT shares are trading mixed with TCS set to announce its first quarter earnings after market hours today while Infosy will announce its earnings on Friday. TCS ended up over 1%. Infosys closed 1.6% lower.
Samson David, a company veteran who joined Infosys back in 1992 as a trainee engineer and then gradually grew up the ladder to become a senior VP and global head for cloud infrastructure and security, has tendered his resignation.
ONGC ended down 1.8% tracking overnight fall in global crude oil prices.
HDFC ended up 0.7%. The mortgage lender’s masala bonds’ issue has so far seen two-three times subscription for the coupon rate the mortgage lender is perceived to issue the paper at.
Tata Steel ended up 0.4%. The steel major’s Kalinganagar steel project in Odisha targets to sell 1.5 million tonne of hot rolled (HR) coils in FY17, the first year of its commercial operation.
Mahindra & Mahindra closed 1% lower. The company announced the incorporation of subsidiary company in the name of Merakisan to carry on the business of procuring and marketing agricultural produce including fruits and vegetables.
Dr Reddy’s Labs ended nearly 1% down after the pharma major is recalling 9,330 bottles of Sirolimus tablets, used for prevention of organ rejection after kidney transplant, in the US due to presence of impurities.
Among other shares, Bharat Forge ended down 2.4% on concerns of growth in the first quarter and corporate governance issues. According to the company's annual report, Bharat Forge has sold 49% stake in its defence subsidiary to the promoter group.
A CLSA report said that this move hints towards corporate governance issues and is a negative.
SRF ended up 2% on reports that the government has imposed anti-dumping duty on imports from China for refrigerant Tetrafluoroethane.
Max India (formerly Taurus Ventures Limited) which listed today ended locked in lower circuit of 5% at Rs 185 on the BSE.
Logistics companies ended over 4% higher on hopes of GST Bill getting passed. Gati, Patel Integrated Logistics, Snowman Logistics, Transport Corporation of India, Allcargo Logistics and VRL Logistics ended up over 4% each.
Image: Stock traders. Photograph: PTI