Markets hit record highs, insurers gain

The benchmark BSE Sensex and the broader Nifty rose to record highs on Thursday after Cabinet approval for a higher foreign direct investment limit in insurance and a rejig in foreign debt limits reinforced optimism about the government's reform agenda.

The Sensex rose to a life high of 26,292.66, surpassing its previous record high of 26,190.44 hit on July 8, while the Nifty hit a new peak for a second straight session at 7,835.65.

The Nifty rose 5.1 per cent in the last eight consecutive sessions of gains compared to a two percent rise in the MSCI Asia Pacific Ex-Japan index in the same period.

Foreign investors bought Indian shares worth Rs 6,520 crore ($108.81 million) on Wednesday, totalling inflows of $723.80 million over six consecutive days of buying, and nearly $12 billion in 2014 so far, exchange and regulatory data showed.

"Foreign investor interest is already high and the government is doing a lot of reforms to revive the economy. Monsoon progress and RBI (Reserve Bank of India) review in August are next on radar," said Nirakar Pradhan, chief investment officer at Future Generali India Life Insurance.

The Sensex rose 0.48 per cent, or 124.52 points, to end at 26,271.85, while the Nifty gained 0.45 per cent, or 34.85 points, to end at 7,830.60.

Insurers gained after the cabinet approved raising the foreign direct investment limit in the insurance sector to 49 per cent from 26 per cent. The hike now needs to be approved by Parliament.

Reliance Capital gained 4.1 per cent, while Max India ended up 0.7 per cent.