They said the markets saw fresh buying momentum by the end of the week on overseas and local fund buying, with interest rate concerns easing due to lower inflation.

Sentiment was boosted as India's inflation slipped for the fourth straight week to an eight-month low of 5.27 percent for the week ended May 12, close to the central bank's so-called "tolerance level" of 5.0 percent.

Dealers said the benchmark 30-share Sensex crossed the 14,000 points level after Indian companies reported higher-than-expected profits for the quarter ended March.

"The markets are on course to hit fresh highs. Inflation data, global market trends all suggest positive trends ahead," said a dealer at brokerage Prabhudas Lilladher.

Indian shares rose 0.24 percent with the benchmark 30-share Sensex index closing at 14,338.45, up 35.04 percent from the previous week's close of 14,303.41.

The Sensex, which intra-week hit the 14,500 points level, is now just 2.6 percent below the intra-day record high of 14,723.8 reached on February 9.

The stock market has gained strongly since India's central bank left key interest rates unchanged on April 24, while lowering the economic growth forecast to 8.5 percent for the fiscal year started April 1 from 9.2 percent last year.

Overseas funds have been net buyers of Indian equities so far this year to the tune of 3.79 billion dollars, well above the 2.93 billion dollars worth of shares that they purchased during the same period a year ago.

In 2006, the Sensex rose by a record 46.7 percent, led by foreign fund investments in Indian equities totalling 7.99 billion dollars.

In 2005, the index climbed 42.3 percent on record overseas fund flows of 10.7 billion dollars.