IT stocks spearheaded a 502-point rally in the Sensex that saw the benchmark index closing above the 66000 mark for the first time in its history.

Both the key indices finished at record levels with the 30-share gauge ending at a new lifetime closing high of 66060.90.

The broader NSE Nifty vaulted by 150.75 points or 0.78 per cent to also clock the same feat as it ended at 19564.50.

During intra-day trades, both the benchmark indices also hit record highs with the Sensex zooming 600.9 points to touch 66159.79 and the Nifty gaining by 181.6 points at 19595.35.

IT stocks saw heavy buying interest despite a muted start to the earnings season from the trio of TCS, HCL Technologies and Wipro.

Market circles said that the main reason behind their rally relates to expectations that the US Federal Reserve could hike rates for one more occasion later this month (July 25-26) after which it could go on an extended pause.

The optimism is that a pause from the Fed could improve the prospects for the US economy, which would be positive for the sector that derives a large part of its revenues from the nation.

“The controlled inflation in the US has instilled optimism among investors that a 25-bps rate hike would be adequate to stabilise the US economy.

“This improved prospect has contributed to the strong buying of Indian IT stocks despite muted Q1 earnings. Furthermore, 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,” Vinod Nair, head of research at Geojit Financial Services, said.