The BSE Sensex rose for a second successive session on Tuesday to touch two-year highs as ITC advanced ahead of its earnings on Friday, while wireless carriers jumped on speculation about tariff hikes.
Shares continue to be supported after the government on Monday delayed the implementation of controversial rules on tax avoidance and lower-than-expected inflation numbers bolstered the case for a cut in interest rates.
However, until the Reserve Bank of India (RBI) policy review on January 29, analysts expect earnings to remain the key drivers for Indian shares, as investors look for signs that profits will improve this year on the back of a recovery in economic growth.
"Market would remain strong on the back of continued liquidity and Q3 earnings would mark the bottoming of earnings growth for India Inc," said Rajen Shah, chief investment officer, Angel Broking
In financial year 2013-14, Sensex EPS should grow by 13-14 percent, added Shah.
The BSE Sensex ended up 0.4 percent, or 80.41 points, at 19,986.82, its highest close since January 6, 2011. It had earlier breached the psychologically important 20,000 level.
The broader Nifty rose 0.54 percent, or 32.55 points, to end at 6,056.60, closing above 6,000 for the second day.
Cigarette maker ITC
ITC has posted double-digit net profit growth in the previous two quarters of the fiscal year that started in April 2012.
Shares in Axis Bank
Tata Consultancy Services Ltd
Among telecoms operators, Bharti Airtel Ltd
Both companies declined to comment on the market rumours.
India's mobile phone market -- the world's second-biggest by customers -- has not seen any meaningful increase in call prices in the last three years after a vicious price war sent call charges tumbling.
Shares in SpiceJet Ltd
Maruti Suzuki Ltd
Among stocks that fell, IT outsourcer Infosys ended 0.7 percent lower, hit by profit-taking after surging 20.85 percent in the previous two sessions on the back of better-than-expected earnings on Friday.
Jaiprakash Power Ventures Ltd