With support from a late rally by traders who covered their short positions due to the prolonged weekend, the Indian markets ended at their highest level since May 2008. Bombay Stock Exchange's 30-share Sensex ended at its highest close since May 16, 2008, at 17,360.61 points, up 129.50 points or 0.75 percent.

The Sensex has gained 80 percent in 2009, more than 72 percent increase in the global emerging market index, as investors become increasingly optimistic about the prospects of the Indian economy. The year 2009 has also seen the Sensex appreciate more than 75 percent from the Jan 1, 2009 closing figure of 9,903.46 points.

Last week, National Stock Exchange's Nifty closed at 5178.40, up 33.80 points or 0.66 percent, its highest close since May 5, 2008. In the broader market, gainers outnumbered losers at 1598:1253 on the BSE.

Broader market indices, too, reflected the bullish sentiments and outperformed the leading indices. The BSE midcap index, which was at 6,641.14 points at its weekly close Thursday, has risen a little over 100 percent from 3,319.10 points it ended at Jan 1, 2009. The BSE smallcap index has jumped 113.1 percent from 3,810.41 points Jan 1 to 8,120.71 points Dec 24.

Benchmark indices have almost doubled since March 10, 2009, aided by buying from foreign investors worth $15 billion. On Wednesday, foreign institutional net bought shares worth Rs. 769.53 crore.

Their local counterparts kept purchases to the minimum at Rs. 13.02 crore. Despite the possibility of further upsides near-term, brokers advice investors to trim exposure to stocks, as outlook remains uncertain in January, when the Reserve Bank of India is expected to announce measures to mop up excess money from banks.