IT stocks led the gains with Infosys Ltd, which is due to report December-quarter results on Friday, rising 2.4 percent. "Market is rising in spite of all the negative news around GDP (gross domestic product) estimate cut, as this is more of a pre-budget rally, while upbeat global markets also boosted sentiment," said R.K. Gupta, managing director at Taurus Asset Management.
India lowered its forecast for the current year's economic growth to 6.5 percent on Friday from the earlier estimated 7.5 percent, before a federal budget is released next month, as businesses were hit by the chaotic launch of new nationwide tax last July. Indications of slightly better earnings this season versus the last quarter has also added to the optimism, Gupta said.
Financials and IT stocks gained, with Infosys Ltd and ICICI Bank Ltd helping the indexes gain. Infosys, which is due to report December-quarter results on Friday, rose 1.8 percent, while ICICI Bank climbed 1.2 percent.
Pharma stocks also advanced, with the Nifty Pharma index up as much as 2.5 percent to a two-month high. Sun Pharmaceutical Industries Ltd rose 3.2 percent and was among the top gainers on the indexes.
Real estate developer Sobha Ltd rose as much as 14.8 percent to its highest in over nine years following its highest ever quarterly sales performance.