The Sensex index hit 21,293 in early trading, exceeding its previous high of 21,206 achieved at the start of 2008.

The fresh high was driven by improved investor sentiment after a number of positive earnings results.

It follows a difficult period for India during which the falling rupee hit a record low, prompting fears of a currency crisis. Financial results so far this year have been disappointing, and a number of brokerages downgraded their market forecasts in the middle of the year.

However, since Raghuram Rajan became head of the Reserve Bank of India in September, confidence has grown.

India has been one of the strongest emerging market performers in a broad bounce-back for indices following the US Federal Reserves decision to delay tapering of quantitative easing.

Over the last month, the Bombay Stock Exchange’s Bankex index has risen by 18%.

Year to date, India’s stock market – currently worth $1.1tn – has risen by 9%.

The Sensex closed the session at 21,196.