India's key share index vaulted 2.54 percent to end at a record high on Thursday with sentiment upbeat after the government took the reform process forward by announcing hefty duty cuts on a wide range of goods and services.
Investors also cheered a government promise to push ahead with its privatisation programme despite the growing prospect of early national elections.
The 30-issue Mumbai share index soared to a closing life high of 6,108.54 points. At the day's peak it was just 32 points off its life high of 6,150.69, struck in February 2000.
The announcement of customs and excise duty cuts came minutes before close of trading and fund managers expect it to help spur more gains at Asia's second best performing stock market in 2003.
"The market has absorbed some of the good news, with more to follow," said Sanjay Sachdev, managing director at Principal Asset Management which manages about 29 billion rupees.
"It is an indication of the election preparation and of the ruling party's commitment to reforms."
The federal government slashed or abolished a range of taxes on popular consumer items and services including inland air travel, a move that analysts said may herald early elections.
National elections are due before October, when the current five-year term of the federal parliament's lower house ends but analysts expect the ruling coalition to call for early polls to take advantage of a buoyant economy and gains in state elections.
The series of cuts announced also covered household white goods, medicines, computers and mobile phones.
Earlier, state-run companies rallied on Disinvestment Minister Arun Shourie's comments that India will push ahead with stake sales.
Oil exploration firm Oil and Natural Gas Corp rose 4.7 percent to 944.10 rupees and gas transporter Gas Authority of India Ltd 2.34 percent to 279.60 rupees.
Analysts had been concerned the stake sales might be delayed beyond the scheduled date of March 2004 if the elections were advanced, raising fears of possible political roadblocks.
The software sector was the other significant gainer as the earnings season got underway.
Infosys Technologies, India's No 2 software exporter and industry bellwether, reports earnings on Friday. It rose 2.9 percent to 5,838.95 rupees.
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