The BSE 30-share Sensex resumed higher and moved in a positive terrain of over 100 points before settling 62.78 points higher at fresh two-year high of 20,101.82. The last time the index settled at this level was on since January 6, 2011. In the previous two days, it had gained over 221 points. The broad-based S&P CNX Nifty of the NSE also improved by 17.90 points to end at 6,082.30.
Brokers said firm European cues and continued capital inflows aided the sentiment, while mixed Asian cues restricted the rise in Sensex.
"While the undertone remains bullish, indices appear to be consolidating...Corporate results have brought in some cheer, but the movement seems restricted to select counters only," said Amar Ambani, Head of Research, IIFL.
Reliance Industries (RIL) with a spurt of 2.35 per cent was the top gainer from the Sensex pack. It alone contributed over 40 points to the index gain after the company on Friday evening announced 24 per cent jump in the October-December profit. This was the first increase in profit after four quarters of declining returns.
RIL logged a new 52-week high of 954.80 during intra-day.
The sentiment also got a boost after global credit rating agency Moody's Investors Services on Saturday retained India's sovereign rating at Baa3, with a stable outlook.
"The quarterly results of Reliance Industries did beat the street expectation. However, the stock saw profit booking for most part of the day. The stock gained more than 10% in last five days," said Milan Bavishi, Head of Research, Inventure Growth & Securities.
Among the major sectoral indices, capital goods and oil & gas sectors were the top performers, up by about 1.50 per cent each.
Realty sector was the worst hit, down by 1.23 per cent followed by healthcare and banking which, according to Amar Ambani, witnessed some profit booking. Of 30-share Sensex pack, 17 finished with gains, while 13 others ended in the red.
Major Sensex gainers were BHEL (2.25 per cent, L&T (2 per cent), Maruti Suzuki (1.87 per cent), Bharti Airtel (1.82 per cent), Dr Reddy's Lab (1.67 per cent), ITC (1.25 per cent), HUL (1.18 per cent) and Gail India (1.13 per cent).
However, Sun Pharma dropped by 1.86 per cent, Tata Motors 1.55 per cent, TCS 1.45 per cent, Cipla 1.38 per cent, Coal India 0.99 per cent and HDFC Bank 0.58 per cent.
HDFC declined despite good third quarter earnings. The company reported a 27.55 per cent jump in the net profit for the third quarter ended December, 2012.
State-run power producer NTPC also dropped by 1.46 per cent after company today announced nearly 22 per cent jump in the net profit for October-December period.
The total market breadth continued to remain negative as 1,514 stocks finished lower while 1,370 ended higher. Total turnover declined to Rs 2,366.57 crore from the last Friday's level of 2,590.55 crore.
Foreign institutional investors (FIIs) bought shares worth a net Rs 1,165.69 crore on last Friday as per provisional data from the stock exchanges.
Meanwhile, Asian stocks ended mixed with downward bias with key indices in China and Singapore moving up by 0.31 per cent and 0.48 per cent while those in Hong Kong, Japan, South Korea and Taiwan easing up to 1.52 per cent.
European markets were trading narrowly higher as indices in France, Germany and UK inched up by 0.26 per cent to 0.60 per cent.