The BSE Sensex on Thursday surged 136 points to breach the psychological 18,000 points level for the first time in two-and-a-half years on the back of good first quarter numbers and easing food inflation, amid positive European cues.
     
A sharp rally in the final hours of trade helped the 30- share barometer of the Bombay Stock Exchange extend gains for the second successive day. The Sensex closed higher by 135.9 points, or 0.76 per cent, at 18,113.15, its best closing since February 15, 2008.
     
The wide-based 50-share Nifty index of the National Stock Exchange, too, added 0.79 per cent to settle at 5,441.95 points, the highest level in 30 months.
     
Europe data helps

Analysts said the Sensex, which was in the negative zone till mid-session, reversed the trend in the final hours of trade as better-than-expected European economic data ignited buying, pushing the index to a high of 18,127.90, up 150 points.
     
Investors also responded positively to news that food inflation declined to 12.47 per cent for the week ended July 10 from 12.81 per cent in the previous week, they said.      

The rally was led by consumer goods, metal, auto, FMCG and financial stocks. Barring IT, all the other 12 sectoral indices on the BSE ended with gains.
     
Analyst optimism

"How long will people wait for sideline trading? Good Q1 numbers have boosted the sentiment and today positive European data also helped the market to break the range-bound trade," Geojit BNP Paribas Research Head Alex Mathews said.
     
"I am hopeful that the market will sustain this level and, in fact, will rise further in coming sessions," he added.      

M&M was the best gainer in the Sensex pack and ended 2.50 per cent higher. Other auto stocks were also in demand, with Tata Motors rising 1.78 per cent and Hero Honda 0.24 per cent.
     
"Our domestic fundamentals are strong and I hope markets will sustain the gains in the near-term," Aneesh Srivastava, the Chief Investment Officer of IDBI Fortis Life Insurance Co, said.
     
In 30-BSE index components, 25 stocks ended with gains, while five ended in the red.