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 Indian shares extended a record-breaking rally to hit new all-time highs on Thursday, fuelled by a global rally over optimism that the U.S. central bank would start cutting rates as soon as next March.

The blue-chip NSE Nifty 50 rose 0.36% to 21,733.35 points, while the S&P BSE Sensex climbed 0.4% to 72,329.85, as of 10:01 a.m. IST. The benchmarks had hit record highs on Wednesday as well.

The more domestically-focussed mid-caps rose 0.16%, while small-caps gained 0.44%.

Nifty PSU banks and Nifty PSE index rose 0.71% and 1.2% each and were the top percentage gainers on the day.

Indian equities are also mirroring gains in Asian shares as they touched five-month highs on Thursday on continued investor confidence on U.S. Federal Reserve rate cuts in 2024. [MKTS/GLOB]

Markets are pricing in a more than 87% chance that the Fed is likely to begin cutting rates next March, according to the CME FedWatch tool.

India's benchmarks have gained more than 8% each this month, with the Nifty 50 notching record highs in 13 sessions of the 19 so far in December.

"We see the markets remaining buoyant at least till the middle of January when the results season starts," said Samrat Dasgupta, CEO of Esquire Capital Investment Advisors.

Analysts at HDFC Securities said that now that the Nifty 50 index has breached above its immediate resistance of 21,550-21,600 levels, there is a possibility of more upside in the short term.

Among individual stocks, Zomato fell 3% after it received a show cause notice for tax liabilities of more than 4.02 billion rupees (near $48 million).

Suprajit Engineering jumped 8.3% after HDFC Mutual Fund Schemes raised its stake in the company by 2.02%.

($1 = 83.3040 Indian rupees)