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The BSE Sensex and Nifty gained on Wednesday for the sixth time in seven sessions on hopes the government will muster a majority in parliament on a crucial vote to allow foreign direct investment in multi-brand retail later in the day.
Traders said optimism ahead of the parliament vote, that will pay the way for more reforms, have triggered a rally in mid-cap and small cap indexes and is a sign of structural bullishness in the market.
"Markets remained cautiously optimistic before the eve of the event in the Parliament," said Kaushik Dani, a fund manager at Peerless Mutual Fund.
"Sentimentally, a lot of things are leaning towards what is going to happen today."
The Sensex gained 0.23 percent, or 43.74 points, to end at 19,391.86, its highest close since April 27, 2011.
The broader Nifty rose 0.19 percent, or 11.25 points, to end at 5,900.50 for the first time since April 13 2011, clearing the psychologically important 5,900 level.
State Bank of India
Other state-run banks that gained were Punjab National Bank
Tata Motors rose 1.25 percent, buoyed by a Morgan Stanley report which maintained its 'overweight' rating and said it is optimistic of a strong rebound in sales in the January to March quarter.
Property developer DLF Ltd
The gains tracked a fall in the price of rubber, a key raw material which constitutes nearly 40 percent of the production cost of tyres. Rubber futures have fallen 6.4 percent in five previous trading sessions.
However, technology shares fell on fears that Cognizant Technology Solutions Corp
Sentiment was also dampened by Cowen's downgrade of Infosys Ltd
Infosys ended down 2.25 percent, Wipro Ltd
(Editing by Prateek Chatterjee)