China's factory sector turned in its best performance in four months in May as export orders improved although activity still contracted, a private survey showed on Tuesday, adding to signs the economy may be stabilising.
Sentiment was also supported after the Reserve Bank of India eased rules to spur bank lending and toned down its inflation rhetoric in moves set to be welcomed by a new pro-business government determined to revive economic growth.
"I am hopeful that we may see a rate cut soon provided the government's administrative actions finally succeed in reducing food inflation," said Motilal Oswal, chairman and managing director at Motilal Oswal Financial Services Ltd.
The benchmark BSE index rose 0.7 percent to a record closing high of 24,858.59, surpassing its previous milestone set on May 26.
The broader NSE index gained 0.7 percent a record closing high of 7,415.85, surpassing its previous record hit on May 23.
Steel shares gained after surveys showed China's factory and services sectors had their best showings in months in May.
Tata Steel rose 6.9 percent, Steel Authority of India gained 4.3 percent, and JSW Steel rose 4 percent.
Among other metal stocks, Sesa Sterlite surged 6.4 percent. Cement stocks also gained on value buying. ACC rose 2.5 percent and Ambuja Cement ended up 3.7 percent.
Sugar refiners rose sharply on expectations that the new government would push ethanol blending in petrol and increase the import duty on the sweetener to support local prices, several traders said.
Bajaj Hindusthan Ltd rose 10 percent, Dhampur Sugar Mills Ltd advanced 10.8 percent, Shree Renuka Sugars Ltd gained 10.7 percent, and Balrampur Chini Mills Ltd ended up 7.8 percent
Zee Entertainment Enterprises gained 2.3 percent after the RBI on Monday said foreign institutional investors can purchase up to 100 percent of stake in the company, up from the earlier limit of 49 per cent.
However, bank shares ended mixed after the central bank kept its key policy rate steady and toned down its inflation rhetoric, while cutting the amount of bonds lenders must set aside with the RBI.
HDFC Bank rose 0.5 percent, while Kotak Mahindra Bank ended down 1.5 percent.
FACTORS TO WATCH
* Euro pinned to recent lows
* Brent slips towards $108 as weak refining demand bites
* Europe stocks dip before inflation data
* BSE index gains 0.7 pct; NSE ends 0.72 pct higher
* India cbank keeps key rate unchanged, loosens credit
* Zee Entertainment gains; RBI lifts FII limit
Sensex, Nifty at new highs as RBI injects liquidity
(PTI) The BSE benchmark Sensex rose by 173 points to close at all-time high level on buying in metal, oil & gas and power stocks as RBI injected liquidity into the markets while keeping key rates unchanged.
The 30-share barometer spurted by 173.74 points, or 0.70 per cent, to close at record 24,858.59 points, surpassing previous all time high of 24,716.88 reached on May 26.
The 50-share Nifty of the National Stock Exchange also closed at record 7,367.10 points, up by 53.35 points, or 0.72 per cent.
As expected by market participants, RBI kept policy rates and CRR unchanged but cut the statutory liquidity ratio (SLR) for banks by 0.50 per cent.
The central bank, in its second bi-monthly monetary policy statement for 2014-15, unlocked about Rs 40,000 crore of banking fund by reducing SLR to 22.5 per cent.
Metal stocks turned investors' fancy after surveys showed China's factory and services sectors had their best showings in months in May.
Tata Steel rose the most among Sensex scrips by 6.69 per cent, followed by Sesa Sterlite which jumped 6.53 per cent.
Oil major ONGC gained 4.40 per cent and RIL by 1.15 per cent, helping the Sensex to rise for second day in a row.
Among 30-index components, 17 stocks closed with gains. Banking shares had a mixed trend today with some counters such as SBI, ICICI Bank and Axis Bank succumbing to profit-booking, while HDFC Bank and and Yes Bank closed higher.
The BSE metal index gained the most by rising 5.06 per cent to 13,155.30, followed by realty index by 3.15 per cent to 1,981.79. The PSU index rose by 1.87 per cent to 8,486.21 and Oil and gas index by 1.76 per cent to 11,359.50.
Among global markets, benchmark indices in Hong Kong and Japan up by 0.91 per cent to 0.66 per cent respectively while European markets were down up to 0.33 per cent in early trade.