Expectations the government is prepared to tackle any crisis related to poor rains and strong global cues after better-than-expected US data and easing oil prices also boosted sentiment, traders said.
Gains in shares of Sensex heavyweights Reliance Industries, HDFC Bank and Infosys alone contributed over 100 points. Overall, 19 constituents in 30-share Sensex ended higher while 11 fell.
The BSE 30-share barometer after resuming higher, slipped into negative terrain on profit-booking in heavy-weight stocks to touch the session's low of 25,659.33.
However, a flurry of buying helped in bounce back to close at yet another new high of 25,962.06, a rise of 138.31 points, or 0.54 per cent. It surpassed previous closing peak of 25,841.2 on July 2.
Yesterday, it had fallen by 17.46 points. For the week, Sensex gained 862.14 points -- the first rise in four.
Blaming hoarders for recent spurt in food prices, Finance Minister Arun Jaitley today said there was no need for panic as country has enough food stocks and promised stern action against black marketeers. Allaying fears of the impact of a delayed monsoon on prices, he said "monsoon has just started, it is a late start and it is too early to create any panic".
The NSE's 50-issue Nifty today climbed 36.80 points, or 0.48 per cent, to close at a new record high of 7,751.60, breaching previous oeak closing of 7,725.15 reached on July 2. Intra-day, it touched a new life-time high of 7,758.00.
Oil and gas sector stocks, led by RIL and ONGC, attracted brisk buying support after reports that the Oil Ministry is likely to move the Cabinet Committee on Political Affairs (CCPA) soon with an expert panel recommendations of raising kerosene and cooking gas (LPG) rates.
Brokers said the sentiment remained upbeat on continued foreign fund inflows ahead of the first Budget of the Narendra Modi-led government.
With the indices hitting record highs, smallcap and midcap stocks were also seen back in demand.
Meanwhile, Foreign Institutional Investors bought shares worth a net Rs 950.82 crore yesterday.
Dipen Shah, Head- Private Client Group Research, Kotak Securities: The markets closed higher on Friday but that was after a fair degree of volatility. The markets closed the week with a new high on the benchmark indices. Market sentiment was buoyed by the comments coming from the PM and FM about modernizing the railways and taming inflation, respectively. Going ahead, we see the monsoon progress and the budget to be the two most important triggers for the markets. We feel that, a progressive budget as well as other reform initiatives will likely lead to continued outperformance of Indian indices v/s emerging market peers. The rise in railway passenger fares and freight charges have raised hopes of a reforms-oriented budget. However, if there is a continued rise in crude price, it will be a negative from the CAD, rupee and inflation perspective. Monsoons have also been erratic and it is a risk from the inflation perspective.
Indian shares hit record closing high on optimism ahead of budget
(Reuters) India's NSE index hit a record high on Friday as bluechips such as Reliance Industries rose on optimism that Prime Minister Narendra Modi will deliver a fiscally prudent budget next week.
Investors are betting that Modi and Finance Minister Arun Jaitley will unveil next week a credible budget that seeks to raise revenue, including from sales of state-run firms, while keeping spending under control.
Foreign institutional investors, who have been the backbone of the 23 percent gain in the broader NSE index so far this year, bought Indian shares worth 9.51 billion rupees ($159.27 million) on Thursday, exchange and regulatory data showed.
"Most investors, including FIIs, are putting new money in the market on hopes the budget will lead the way to a revival in the economy. Build-up of positions has already started," said Deven Choksey, managing director at KR Choksey Securities.
"The budget may focus on revival in growth and fiscal consolidation. We are bullish and expect the Nifty to trade between 7,500 and 8,000 in the near term,"
The benchmark BSE index closed 0.54 percent higher at record 25,962.06. It gained 3.4 percent this week after falling in the previous three weeks.
The broader NSE index ended 0.48 percent higher at record 7,751.60, gaining 3.2 percent this week.
Bluechips were among the leading gainers. Reliance Industries Ltd ended 2.5 percent higher, marking its biggest single-day gain since June 6.
Other gainers included HDFC Bank, which was up 2.4 percent, and NTPC Ltd which gained 0.8 percent.
Investors also hedged their risk by buying defensives such as drug makers. Dr Reddy's Laboratories Ltd rose 1.5 percent and Sun Pharmaceutical Industries Ltd ended 0.4 percent higher.
Among other bluechips, Bharti Airtel Ltd gained 0.7 percent after the Reserve Bank of India increased limit for overseas investors to buy shares in the company.
However, recent outperformers such as metal stocks were under selling pressure. Hindalco Industries Ltd ended 0.3 percent lower, adding to its 2.52 percent fall on Thursday. The stock still gained 7.7 percent this week. Tata Steel Ltd ended 0.5 percent lower.