The broader NSE index ended up 1.02 percent at 8,273.8, after hitting its highest level since November 15. MSCI's broadest index of Asia-Pacific stocks outside Japan rose more than 1 percent, extending a rally that has seen it gain 2 percent in the opening days of 2017. Traders said the Indian market would ultimately be driven by corporate earnings, with Tata Consultancy Services and Infosys scheduled to post their quarterly results on January 12 and January 13, respectively. India is also gearing up to its annual budget, and investors hope Prime Minister Narendra Modi's government would keep spending under control and promote growth after its move to ban higher-value banknotes paralysed large parts of the economy.
"The budget is expected to be fiscally disciplined, with hopes that the government may take measures to boost economic recovery post the demonetisation impact," said Tirthankar Patnaik, India strategist at Mizuho Bank. All sectors on the NSE index rose, with financials and auto stocks gaining the most. ICICI Bank and State Bank of India rose more than 1 percent, while Tata Motors and Hero MotoCorp rose over 3 percent and 2 percent, respectively.