Domestic equity benchmark Sensex rose 86 points on Wednesday, led by gains in Reliance Industries, HDFC Bank and ICICI Bank amid positive cues from global markets.
After touching a high of 38,788.51 during the day, the BSE Sensex settled 86.47 points or 0.22 per cent higher at 38,614.79.
The NSE Nifty rose 23.05 points or 0.20 per cent to 11,408.40.
Tech Mahindra was the top gainer in the Sensex pack, rising around 2 per cent, followed by Bharti Airtel, Maruti, ICICI Bank, SBI, HDFC Bank, Asian Paints and Reliance Industries.
On the other hand, Bajaj Auto, ONGC, Nestle India, HUL and Kotak Bank were among the laggards.
According to traders, domestic bourses followed positive cues from global markets after US equities hit record highs in overnight session.
Stocks were mixed in Asia on Wednesday after the S&P 500 logged a fresh all-time high.
Japan's Nikkei 225 index edged higher after the country reported its exports fell 19 per cent in July from a year earlier. Markets in Hong Kong were closed due to a tropical storm.
The data was an improvement over a 26.2 per cent drop in June and slightly better than expected, while an 8.2 per cent increase in exports to China was the first since early-2019 and suggests the recovery there is helping offset weak demand in other markets, said Marcel Thieliant of Capital Economics.
The nearly 21 per cent decline in exports to the U.S. was much better than the 50.6 per cent slump in May, with strong demand for technology allowing people to work from home helping sustain exports of computer chips and electrical machinery, he said.
"But car exports, which were down 30 per cent year-on-year, remain Japan's Achilles heel," Thieliant said in a commentary.
Worries over trade tensions between the U.S. and China, which threaten to further disrupt trade between the two largest economies, pulled the Shanghai Composite index 0.9 per cent lower, to 3,421.58.
Tech stocks have stumbled recently amid worries that China could retaliate against U.S. moves against network equipment maker Huawei, social media company ByteDance and other Chinese technology giants by targeting U.S. chip makers and others.
Tokyo's Nikkei 225 index edged 0.2 per cent to 23,101.76 while the S&P/ASX 500 in Australia jumped 1 per cent to 6,183.90.
Overnight, Wall Street clawed back the last of the historic, frenzied losses unleashed by the new coronavirus, as the S&P 500 closed at an all-time high Tuesday, gaining 0.2 per cent to 3,389.78.
That eclipses the S&P 500's previous record closing high of 3,386.15, which was set Feb. 19, before the pandemic shut down businesses around the world and knocked economies into their worst recessions in decades.
The S&P 500's milestone caps a furious, 51.5 per cent rally that began in late March.
The index, which is the benchmark for many stock funds at the heart of 401(k) plans, is now up nearly 5per cent for the year.
The stock market's sprint back to an all-time high also means that the gut-wrenching, nearly 34 per cent plunge for the S&P 500 from Feb. 19 through March 23 was the quickest bear market on record, clocking in at just one month.
The average bear market takes 19.6 months to bottom out, according to S&P Dow Jones Indices.
Tremendous amounts of aid from the Federal Reserve and Congress helped launch the rally, which has progressed on signs of budding growth in the economy.
More recently, blowout corporate profit reports from technology giants such as Apple and Microsoft and earnings from harder-hit industries that were better than expected have helped boost stock prices.
The Dow Jones Industrial Average fell 0.2 per cent on Tuesday to 27,778.07.
It remains 6 per cent below its record set in February. The Nasdaq composite had already returned to a record, thanks to huge gains for the big tech stocks that dominate it. It hit a new one Tuesday, climbing 0.7 per cent, to 11,210.84.
The lightning recovery is even more noteworthy considering prevailing uncertainties. Millions of Americans are relying on unemployment benefits, and businesses across the country are still shutting their doors.
COVID-19 continues to spread throughout the world, with more than 5.4 million known cases and 170,000 deaths in the United States alone.
Investors are still waiting to see if Congress and the White House can get past their partisan differences and agree on more aid for the economy.
Without the stimulus, analysts say the economy won't be able to make the recovery that investors have been assuming is on the way. And that assumption is a huge reason the stock market is as high as it is.
Many investors acknowledge the disconnect between the stock market and the broader economy, but they say the rally has been built on top of several supports.
Key among them is that the Federal Reserve and Congress already have plowed trillions of dollars into the economy, to keep it from plunging even more deeply and to prevent a full-blown financial crisis.
Their unprecedented moves helped halt the S&P 500's free-fall in March.
On Tuesday the government reported that construction of new U.S. homes surged 22.6 per cent last month, the third straight month of gains.
With such budding economic improvements in hand, investors are looking ahead to later this year or 2021 when profits recover further and a vaccine for COVID-19 hits the market.
The five biggest companies in the S&P 500 by market value appear recession-proof. These Big Tech companies increasingly drive the S&P 500's movements almost by themselves, and they've benefited from the pandemic because it accelerated work-from-home and other tech trends.
Apple has more than doubled since the market's recent bottom on March 23, while Facebook is up 77 per cent and Amazon is up 74 per cent.
Still, there are signs of skepticism. The yield on the 10-year Treasury dipped to 0.66 per cent from 0.67 per cent late Tuesday.
In March, the yield had touched its record low just beneath 0.34 per cent. Last year, it was over 1 per cent.
(With inputs from AP and PTI)