Indian shares hit a record high for a second consecutive session on Tuesday tracking gains in global markets, with the NSE Nifty breaching 9,800 points for the first time as trading turned normal a day after a major technical disruption.
Volumes recovered on the NSE, with traders reporting no issues with placing trades or quotations. A technical glitch had disrupted trading at the country's largest exchange on Monday for five hours.
Domestic shares tracked Asian peers, which gained on Tuesday after global markets rallied overnight on robust economic data from Germany and renewed interest in U.S. technology stocks spurred by an Amazon Prime online sale event.
Traders also attributed the rise to unwinding of short positions in futures and options after market regulator Securities and Exchange Board of India banned the use of offshore derivative instruments such as participatory notes (P-notes) that track other derivatives.
"With SEBI issuing a circular that all naked positions in derivatives by P-notes to be wound up, and with most F&O contracts not being long term, everything has to be wound up in three-four days," said Rakesh Tarway, head of research at Reliance Securities.
"There are lot of shorts built in stocks like TCS Ltd and Infosys, and when the positions are wound up, there will be a rally," Tarway explained.
The NSE Nifty rose as much as 0.56 percent to a record high of 9,825.8. It was trading up 0.54 percent at 9824.3 as of 0713 GMT.
Meanwhile, the benchmark Sensex rose as much as 0.48 percent to an all-time high of 31,868.6.
Among gainers, sugar stocks surged after India, the world's largest sugar consumer, raised import tax on sugar to 50 percent from 40 percent in an effort to curb cheaper imports.
IT stocks continued to rally with Infosys Ltd gaining 2.5 percent. The United States, the sector's biggest export market, announced better-than-expected jobs data for June on Friday.
Among decliners, shares of carrier SpiceJet Ltd fell as much as 3.7 percent on media reports of former promoter Kalanithi Maran seeking 20 billion rupees ($310.16 million) compensation from the company.