The wide-based Nifty rose by 19 points, or 0.31 per cent to trade at 6,101.30 points, a level not seen since January 2011.
However, profit booking emerged at two-year high levels and the sensitive index slipped to trade at 6,098.65 points at 1055 hrs.
Among the NSE-50 stocks, 32 advanced, while 18 declined.
Brokers said steady inflow of capital inflows by foreign funds driven by the government's decision to deregulate diesel prices in a key economic reform measure, and better-than-estimated third quarter earnings by some blue-chip companies,
helped Nifty to cross 6,100-level.
Meanwhile, the BSE benchmark Sensex was trading up 36.12 points, or 0.18 per cent, at 20.137.94.
Earlier, the BSE benchmark Sensex today rose by over 26 points in the opening trade to touch a new two-year high of 20,128.58 on sustained buying by funds on strong third quarter earnings posted by corporates amid a firming trend in the Asian region.
The 30-share index, which had gained nearly 284 points in the previous three sessions, rose by 26.76 points, or 0.13 per cent, to trade at a new two-year high of 20,128.58.
Similarly, the wide-based National Stock Exchange index Nifty rose by 6.80 points,or 0.11 per cent, to 6,089.10.
Brokers said sustained buying by funds as well as retail investors driven by announcement of encouraging third quarter results by blue-chip companies, buoyed the trading sentiments.
However, stocks of gold trading companies such as Titan Industries, P C Jewellers, Rajesh Exports and Gitanjali Gems were under pressure and lost up to two per cent, after the government hiked the import duty on gold and platinum to six per cent from 4 per cent yesterday.
In the Asian region, Hong Kong's Hang Seng index and Japan's Nikkei were marginally up in the morning trade today.
Stocks to watch-Jan 22
(Reuters): GLOBAL MARKETS ROUND UP
Nifty futures on the Singapore Exchange rose 0.07 percent. The MSCI-Asia Pacific index, excluding Japan was flat.
The yen and Asian shares marked time as investors awaited the outcome of the Bank of Japan's policy meeting, with expectations running high for bold monetary easing measures aimed at reflating the world's third-largest economy.
U.S. stock markets were closed for a public holiday on Monday.
FACTORS TO WATCH
Hindustan Unilever Ltd earnings
India's Finance Minister to meet foreign investors in Hong Kong
India has raised the import tax on gold by 2 percentage points to 6 percent to curb purchases and rein in a ballooning fiscal deficit but industry officials expect only a moderate drop in demand.
The government wants to junk arbitration proceedings and favours direct negotiations with Reliance Industries in its dispute over the cost of developing the controversial KG-D6 block, Oil Minister Veerappa Moily said.
In 24 months, diesel for retail consumers will be sold at market prices, with fuel subsidies only on LPG and kerosene, oil minister Veerappa Moily said.
Shree Cement Ltd's October-December net profit rose more than three-fold to 2.17 billion rupees from a year ago.
The government will restore allocation of three cancelled coal blocks of NTPC Ltd on Tuesday, Power Minister Jyotiraditya Scindia told reporters after a ministerial panel's meeting.
IDBI Bank Ltd plans to raise equity capital by issuing shares to institutional investors through a qualified institutional placement in the fiscal fourth quarter.
Reliance Communications Ltd is negotiating a network sharing deal with Reliance Industries Ltd that is slated to launch fourth generation services or high-end data services on mobiles this year, two executives aware of the development said.
India's foreign investment board cleared IKEA's proposal to set up stores in the country, Trade Minister Anand Sharma said, paving the way for it to invest $1.86 billion over 15-20 years.
Bharat Business Channel Ltd, the satellite broadcasting arm of Videocon Group, is likely to raise 7 billion rupees through an initial share sale in mid-February at 60-70 rupees per share, said a person familiar with the development.