The blue-chip Nifty 50 index closed 0.52% up at 19,525.55 for its highest since Oct. 20 while the S&P BSE Sensex advanced 0.55% to 65,259.45. Both registered a second consecutive week of gains on Friday.
Many traders believe that gains made during "muhurat", which means auspicious in Hindi, bring prosperity and wealth in the year ahead.
Since the last Diwali, the Nifty has risen 10.5% up to last close, aided by stable macroeconomic fundamentals and rising retail investor participation.
"India is in a sweet spot among emerging markets (EMs), with relatively better growth prospects," said Deven Choksey, managing director of DRChoksey FinServ, adding that a 10-15% pre-election rally is possible for the Nifty 50 between now and mid-2024.
All the 13 major sectors logged gains in the special session, with strongly weighted financials and information technology (IT) stocks rising 0.44% and 0.72% respectively.
The energy index added 0.79% and was among the top sectoral gainers.
Coal India rose 2.6% and was the biggest gainer on the Nifty 50 after topping profit expectations in the second quarter, aided by high power demand.
BSE surged 5.7% and hit a record high on strong quarterly results.
Real estate stocks gained 0.6% to a record high. The sector has been scaling fresh highs over the past two weeks, supported by strong earnings.
"Expect the earnings of realty companies to improve going forward, supported by stable demand and the interest rate outlook in India," said Gaurang Shah, senior vice president at Geojit Financial Services.
More domestically focused small and mid-caps gained 1.14% and 0.61% respectively, having outperformed the blue-chip Nifty 50 so far this year, aided by strong retail inflows.
(Reporting by Bharath Rajeswaran in Bengaluru; Editing by David Goodman)
By Bharath Rajeswaran
