MUMBAI: Indian stocks soared to record highs on Wednesday, aided by a fresh bout of foreign portfolio inflows that drove the rupee up to a six-week high. The Nifty closed above 10,400 for the first time, led by strong rallies in large lenders including SBI and ICICI Bank. The jump in India’s position in the World Bank’s Ease of Doing Business (EODB) ranking by 30 places lifted investor sentiment and drove the rupee higher. Investors believed that the jump in EODB rankings would increase foreign direct investment into the country.Oil prices rose to their highest since mid-2015 on expectations that major oil producers will maintain their output cuts. The BSE Sensex rose 387.14 points, or 1.17%, to end at 33,600.27 while the Nifty gained 105.20 points, or 1.02%, to close at 10,440.50.Bharti Airtel was the biggest gainer on the indices, advancing 8.2% after the company posted strong second quarter results.With this, India has now become the world’s most expensive market based on price-to-earnings ratio. The Sensex’s P/E ratio on a trailing basis is 24.53 times compared with 19.67 for the Dow Jones, 23.32 for the UK and 17.04 times for the Shanghai composite.The rupee gained 15 paise, or about 0.23%, to close at 64.60 a dollar, its highest level since September 20. Currency market dealers said the spike could have been higher but for the intervention by the Reserve Bank of India.Foreign portfolio investors net bought shares worth Rs 1,038 crore on Monday, while their domestic counterparts sold shares worth Rs 668 crore. Since early August, foreigners have predominantly sold Indian stocks, which have been absorbed by domestic mutual funds and insurance companies. While it may be too early to conclude that their selling trend has reversed, brokers said a sustained rebound in the rupee could lead to fresh inflows.“It’s a market driven by liquidity,” said Nilesh Shah, managing director, Kotak Asset Management. “Money is flowing into equities because other asset classes are not looking attractive and there are hopes of economic and earnings growth.”Fund managers said cautious traders, who had created bearish bets when the market hit all-time highs earlier this week, were forced to square up on Wednesday, providing further fillip to benchmark indices. The gains in the broader market were relatively measured with the mid-cap index rising 0.35% and the small-cap index moving up 0.65%.Asian shares hit a 10-year high on Wednesday, while US markets rose on Tuesday night on expectations of tax rate cuts by the Donald Trump administration.Oil extended its winning run on Wednesday with Brent crude futures rising to $61.49 per barrel, off the day’s high of $61.70, the highest since July 2015. In October, oil prices posted their fourth straight month of gains.Rising crude oil prices are usually positive for sentiment in emerging market equities. For India, which is a net importer of crude, higher prices is not good news.“Higher oil prices are tantamount to a negative terms-of-trade shock that weakens growth, pushes up inflation and deteriorates the twin deficits,” said Nomura’s economist Sonal Varma in a note to clients.