MUMBAI (Reuters) - The Sensex and the Nifty rose to their highest level in nearly 2-1/2 weeks on Thursday as technology stocks such as Tata Consultancy Services (TCS.NS) gained on expectations of improving sector earnings this year, especially in the United States.
Domestic stocks gained late in the trading hours after European shares edged higher on expectations the European Central Bank could point to future policy easing after its rate-setting meeting.
But at home, investors are focusing on key inflation and industrial output data due next week, which will be crucial ahead of the RBI's policy review on March 19. Any additional fiscal measures by the government will also be eyed.
"The markets at the moment are centred around global central bank policy meetings and RBI policy on March 19, for which the market is pricing in some rate cuts," said Brenda Kelly, Market Strategist at IG Markets.
"ECB and BOE meetings would give us cues to what happens not just globally but in India as well, for the near to medium term," added Kelly.
The Sensex rose 0.84 percent, or 160.93 points, to end at 19,413.54, the highest close since February 20, after having touched a three-month low on Monday.
The Nifty rose 0.77 percent, or 44.70 points, to end at 5,863.30, adding 2.9 percent in three sessions.
Traders bet improving global environment for Indian technology companies, which derive nearly 70 percent of their revenues from the United States and Europe, will translate into a pickup in demand that can in turn improve margins.
Infosys Ltd (INFY.NS) gained 1 percent, marking its highest close since April 13, 2011, at 3,004.35 rupees. Tata Consultancy Services (TCS.NS) rose 1.84 percent to an all-time closing high of 1,589.90 rupees.
Hero MotoCorp Ltd (HROM.NS) shares ended 4.04 percent higher after Kotak Institutional Equities upgraded the stock to "add" from "sell" on expectations of higher earnings growth.
Elder Pharmaceuticals (ELDP.NS) rose 4.6 percent after it announced a cosmetics products joint venture with Japan's Kose Corp. The venture, in which Kose will hold 60 percent, will help Elder expand its business base, dealers said.
Among recent outperformers that fell, Tata Steel (TISC.NS) ended 0.6 percent lower, following a 5.4 percent gain in the previous two sessions, while Tata Motors (TAMO.NS) shares dropped 1.13 percent after gaining 7.3 percent in the previous three sessions.
Cement companies fell on concerns over poor growth and low demand, especially after the sector's third quarter earnings failed to impress the market.
Additional Reporting by Abhishek Vishnoi; Editing by Jijo Jacob