Indian shares closed at a new all-time high on Friday in one hour of ceremonial trade to mark the Hindu festival of Diwali. The benchmark 30-share Sensex index rose 0.53% or 111.39 points to a record close of 21,004.96, marking its fourth straight day of gains.
The markets have seen a surge in buying of newly floated Coal India, improving global liquidity and strong foreign interest for fast growing domestic firms.
The Sensex's previous highest close was 20,893.57 struck on Thursday and it last crossed 21,000 points nearly three years ago in January 2008.
The stock markets open for a one-hour token 'Muhurat' (auspicious beginning) trading late evening on Diwali day.
Traders buy stocks to seek blessings from the Hindu goddess of wealth Lakshmi, in hopes of prosperity in the coming trading year.
On Friday, buying was seen in metal, healthcare and auto stocks.
The leading index on the Mumbai Stock Exchange has risen 20.2% this year, led by record overseas fund flows of 26.7 billion dollars, and strong economic growth of nearly nine percent in the fiscal first quarter.
Friday's rise made India's Sensex index one of the top performing major markets globally.
The Indian market was also lifted by news that the US central bank planned to pump more money than expected into the economy in order to kickstart recovery, boosting hopes the world's biggest economy could see stronger growth.
"The markets are buoyant over economic growth prospects. Foreign investors will need to look at India to make serious money," said Alok Churiwala, director of Mumbai-based brokerage Churiwala Securities.
"Coal India has been a game-changer for investor mood," said Ashu Madan, chief operating officer of Religare Securities.
The sale of a 10% stake in Kolkata-based Coal India last month was the biggest share sale in Indian history and banked the government 3.4 billion dollars.
Shares in state-run Coal India have risen 43 percent since listing at the stock exchanges this week. The stock rose 2.13% at 349.65 rupees on Friday as investors scrambled to invest in the world's biggest coal miner.