Amidst cross-border tensions with Pakistan and geo-political worries, the Indian equity markets closed the week's trade in a celebratory mood, with the benchmark BSE Sensex and NSE Nifty touching fresh record highs of 31,000 and 9,600 points respectively.

Markets observers opined that robust corporate results, rupee appreciation and expectations of further economic reforms from the central government accelerated the ongoing market rally. 

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Besides, sentiments were buoyed by stellar investments by foreign portfolio investors (FPI) and healthy roll-overs seen on the expiry of the May 2017 series contracts in the futures and options (F&O) segment to June 2017 series.

On Friday, the 30-scrip Sensitive Index (Sensex) of the BSE crossed the 31,000 mark for the first time in its history to close at a new high of 31,028.21 points — up 563.29 points or 1.85 per cent from its previous week's close.

The wider 51-scrip NSE Nifty, too, surged and touched the 9,600-mark. The index ended at a new high of 9,595.10 points — up 167.2 points or 1.77 per cent from it's last week's close.

The Sensex touched a new 52-week high of 31,074.07 points and Nifty that of 9,604.90 points during the week ended May 26.

According to D.K. Aggarwal, Chairman and Managing Director, SMC Investments and Advisors, domestic market participants looked a little nervous following the flaring up of tensions with Pakistan.

"The reports against the (US President Donald) Trump administration on collusion with Russia also dented the confidence of the market participants," Aggarwal pointed out. 

"However, buoyant global markets and robust corporate outlook and a strong rupee lifted the sentiments of the market participants on Thursday," he added.

During the week, the Indian rupee strengthened by 20 paise to 64.44-45 against the US dollar from last week's close of 64.64-65.

"The domestic indices had witnessed a minor correction on last Wednesday, however, post a stellar May F&O expiry there was no holding back as the markets went on to touch new heights. The F&O expiry added to the euphoria as market-wide rollover of F&O contracts stood at 76 per cent, which were higher than three months' average," said Vijay Singhania, Director, Trade Smart Online.

"Robust inflows from FPIs to equities and debts have been supporting the domestic markets in May. Further, corporate earnings so far for the last quarter remained in line with analyst expectations," he added.

Figures from the National Securities Depository (NSDL) revealed that FPIs invested in a total of equities and debts worth Rs 7,677.31 crore, or $1.18 billion, during May 22-26.

Provisional figures from the stock exchanges showed that foreign institutional investors (FIIs) sold stocks worth Rs 324.95 crore, while domestic institutional investors (DIIs) purchased scrip worth Rs 2,584.61 crore during the week.

"Investors continued to build hefty positions across the board as sentiments got a boost after the cabinet approved dismantling of the two-decade-old Foreign Investment Promotion Board (FIPB) and defined a new mechanism to approve overseas investment applications and hasten fund flows," Dhruv Desai, Director and Chief Operating Officer of Tradebulls, told IANS.

"Most pharma stocks faced selling pressure and traded down in most of the trading sessions of the week," he added.

The top weekly Sensex gainers were: Tata Motors (up 8.53 per cent at Rs 480.75), ITC (up 7.96 per cent at Rs 308.65), ICICI Bank (up 4.74 per cent at Rs 321.65), Tata Steel (up 4.58 per cent at Rs 511.80) and Maruti Suzuki (up 4.21 per cent at Rs 7,073.35).

The losers were: Lupin (down 15.44 per cent at Rs 1,111.90), Sun Pharma (down 12.86 per cent at Rs 568.55), Cipla (down 12.75 per cent at Rs 491.60), Dr. Reddy's Lab (down 9.20 per cent at Rs 2,411.70), and State Bank of India (down 6.39 per cent at Rs 288.45).