The sentiment was also boosted on speculation that Federal Reserve could maintain monetary stimulus next year on concerns that the 16-day partial US government shutdown, which ended this week, may curb growth in the world's largest economy.
The BSE benchmark Sensex and Nifty climbed to their highest peaks in almost three years on value buying across the board triggered by global cues as concerns about US tapering eased and China's economic growth picked up.
The Sensex resumed slightly higher at 20,534.61 on initial buying, but dropped to 20,375.42 on fresh selling in view of rising inflation figure amidst lowering of forecast for India's economic growth by the World Bank.
However, it recovered to 20,932.23 before ending at 20,882.89, showing a gain of 354.30 points, or 1.73 percent, over the previous close. The 30-share BSE index notched up to its highest close since 20,932.48 on November 9, 2010.
Meanwhile, inflation, as measured by Wholesale Price Index, rose to a seven-month high of 6.46 percent in September from 6.1 percent in August and 5.85 percent in July.
The World Bank lowered its forecast for India's GDP growth to 4.7 percent in FY14 from 6.1 percent estimated earlier.


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