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A sharp rally in IT stocks powered the Sensex to close above the 66,000-mark for the first time ever on Friday.

IT heavyweights led the rally as the BSE Sensex closed at 66,060, up 502 points.

Among IT heavyweights, TCS was up 5.1 per cent, Tech Mahindra was up 4.4 per cent, while Infosys was up 4.4 per cent.

HCL Tech was up 3.8 per cent, while Wipro was up 2.6 per cent.

Vinod Nair, Head of Research at Geojit Financial Services, said that controlled inflation in the US has instilled optimism among the investors that a 25 bps rate hike will be adequate to stabilise the US economy. This improved prospect has contributed to the strong buying of Indian IT stocks despite muted Q1 earnings.

Also, the broad-based rally in the domestic market was supported by India's consecutive third month decrease in wholesale prices, along with the positive involvement of FIIs, he said.

Nifty traded positive throughout the session and witnessed sharp up-move in the last half-an-hour to close near day’s high at 19,565 levels (151 points higher; +0.8 per cent). The index touched yet another new high of 19,595 intraday.

Siddhartha Khemka, Head of Retail Research at Motilal Oswal Financial Services, said global cues too were supportive following the release of another soft inflation data.

The PPI inflation rose only 0.1 per cent month-on-month in June, leading to hopes that Fed may soon take a pause.

Broader market outperformed with gains of 1-1.5 per cent. All indices ended in green with IT being an outlier (gains of 4.5 per cent), as most of the negatives have been priced in and valuation looks attractive at this juncture. Apart from IT, media and realty and metals too witnessed good gains, he said.

Going ahead, the market would keenly watch out for merged HDFC Bank results on Monday, which now holds 29 per cent weightage in Bank Nifty.

"As we fully enter into quarterly earnings season, stock specific action will pick up steam. Moreover, expectation of good quarterly results, consistent FIIs buying interest and good progress on the monsoon front will keep the overall trend of the market positive, he added.