Indices hit a new high Wednesday on strong institutional flows. The BSE Sensex rose by 1.77% to hit a new high of 22,740.04, while Nifty surpassed previous highs with a 1.7% gain at 6,808.70.
A strong wave of fresh investments by foreign institutional investors was said to be behind the new highs, dealers said.
FIIs bought shares worth Rs 1,044 crore on Wednesday as they believe the new government would address most bottlenecks that have derailed the Indian economy.
Bank and pharma counters were bubbling with renewed buying interests. FIIs, in the last two trading sessions, have net purchased stocks worth Rs 1,173.86 crore.
Most market players expect Nifty to hit the 7000 mark. "We are not far away from the 7000 mark and it is only a matter of time before Nifty crosses that level," said a chief dealer at a foreign brokerage.
In banking, ICICI Bank rose 3.63%, HDFC Bank by 2.5%, State Bank of India was up 3.6% and Bank of Baroda ended with a gain of 5.3%.
In pharmaceuticals, Ranbaxy Laboratories and Sun Pharmaceuticals were in the limelight.
Sun Pharma was up 6.78% at Rs 628 while Ranbaxy appreciated 4.66% to Rs 466.50.
Ranbaxy has rallied 34.86% in the last eight trading sessions while Sun Pharma, after its announcement to acquire Ranbaxy in a $3.2 billion deal on Monday, gained 10.18% in the two trading sessions to date.
On Tuesday, the markets were closed for Ram Navami.
The spurt in Ranbaxy before the announcement of the deal has led to some furore in the broking community that is now accusing research houses of insider trading. It is not known yet whether a few players were privy to the information on the merger but the market regulator, Securities and Exchange Board of India (Sebi), is believed to be probing the insider-trading accusations.
Ranbaxy from Rs 346.55 on March 27 has shot up by Rs 110.80 at Wednesday's closing level of Rs 466.50.
The market sentiment, however, remains buoyant as FIIs are back pumping in money, market players said.