Continued foreign fund inflows propelled the BSE Sensex to post its best single-day gain in five months and close 2.4% higher on Wednesday, with firm world equities also supporting the bullish sentiment. Indian market is now about 200 points away from breaching its all-time closing high of 20,873 and about 500 points away from its all time high of 21,205.The 30-share BSE Sensex closed 484.54 points higher at 20,687.88 points, with 28 of its components closing in the green.

The benchmark has risen 18.5% so far in 2010, propelled by FII inflows. Foreign funds have poured in $22.3 billion into the equities year to date. As per BSE provisional figures, foreign funds invested Rs 2,102 crore into the equity market on Wednesday. The country?s equity market is now 2.5% away from its highest levels reached in January 2008 and less than 1% away from its all-time closing high.

?Our market today was buoyed by overnight indications from the Fed that they may print more money and thereby more liquidity will come in, driving emerging markets further,? Sandip Sabharwal, CEO of portfolio management services at brokerage Prabhudas Lilladher said.

World stocks rose on increasing expectations that the US Federal Reserve will ease policy to support the economy. MSCI’s all-country world equity index was up 0.7% at 1050 GMT.

Betting on a recovery in Europe or on continued strength in emerging markets could yield lucrative bargains and be safer than standing pat in the United States and risking a double dip, hedge fund managers said in New York on Tuesday.

Indian stocks have outperformed their Bric peers Brazil, Russia and China so far in 2010.

?On results, the concerns are, we have factored in all likely positives. But, have not counted in any likely negatives,? Sabharwal said referring to the September-quarter earnings season that starts ticking this week.

This month, RBS Equities said it expects healthy 6-7% dollar revenue growth for the top four outsourcing firms, with about 1 percent cross-currency tailwind.

The brokerage also said it expects profit after tax of the top four to improve 8% quarter-on-quarter. Leading IT services firm Tata Consultancy Services and third-ranked Wipro gained 4.6% and 4.5% respectively.

Financials gained as investors were optimistic about the loan demand outlook in a fast-expanding economy. Leading lenders SBI, ICICI Bank and HDFC Bank rose between 1.9% and 2.5%. Mortgage lender Housing Development Finance Corp rose 4.6%. Metal producers rose sharply mirroring a huge jump in base metal prices.

Copper prices in London and New York extended gains to touch 27-month highs, while Shanghai zinc futures hit their highest since April, buoyed by a fall in the dollar and expectations of the US stimulus measures.

Non-ferrous metals producer Sterlite Industries and aluminium producer Hindalco jumped 2.3% and 2.7% respectively.Tata Steel, the world’s seventh-largest steelmaker, firmed 0.8%. Energy conglomerate Reliance Industries rose 1.7% as it tried to catch up with the broader market.

The stock, which weighs the most on the Sensex, has lagged the market year-to-date as a lack of any near-term triggers led to a decline of 1.6%. Advancing shares led declining ones in a ratio of 1.8:1 on a robust volume of 584 million shares. The 50-share NSE index gained 2.4% to 6,233.90 points.