The benchmark BSE Sensex on Friday jumped by 121 points, or 0.6%, at 19,445, following cues from Asian shares that gained ahead of the US negotiations on fiscal cliff.
Brokers also said that Reliance Industries Ltd, Oil and Natural Gas Corp, Indian Oil Corp and Bharat Petroleum Corp Ltd attracted heavy buying following reports that the government might gradually increase diesel prices to cut subsidies, thereby pushing up the Sensex.
The Nifty also gained 0.7%, or 39 points, to end at 5,908.
According to industry experts, the markets would also look forward to India's current account data for the July-September period that would be released on Monday. However, the index is expected to remain in the positive territory even in 2013, they added.
"Indian benchmark indices fared very well during 2012, gaining about 25% and were among the top 3 performers when compared to major developed and developing markets, said Dipen Shah, head, private client group, research, Kotak Securities. "We believe that, in 2013, markets will be driven largely by developments on domestic reforms."