The Sensex closed at a new record high of 40889.23 on Monday as expectations of improved US-China trade ties swayed sentiments, with investor wealth rising Rs 1.81 lakh crore on the BSE.

The benchmark index on Monday gained 529.82 points, or 1.31 per cent, on hopes of an early US-China deal that will remove the uncertainties surrounding global trade.

While the optimism led to a rally in metal stocks, other counters also gained on the back of positive developments that included the government’s proposed divestment plans and the decision by the three telcom operators to raise tariffs.

There were other factors that contributed to the positive sentiment. Portfolio flows have been strong this month, with investors purchasing more than Rs 18,000 crore of stocks.

Provisional data from the National Stock Exchange showed that FPIs continued their buying activity and purchased stocks worth Rs 961 crore on Monday.

The BSE Sensex began on a positive note at 40439.66 and went on to hit a record intra-day high of 40931.71, before finally ending at 40889.23 — its all-time closing peak.

On the NSE, the broader NSE Nifty closed with a gain of 159.35 points, or 1.34 per cent, at 12073.75 and is a few points away from its life-time closing high and intra-day peak.

Sectorally, the BSE telecom index zoomed nearly 7 per cent after Bharti Airtel, Vodafone Idea and Reliance Jio announced plans to raise tariffs.

The metal index, too, rose over 3 per cent on hopes that the US and China may strike an early deal.

Bharti Airtel led the gainers list on the BSE with its shares rising 7.20 per cent to Rs 451.30, followed by Tata Steel, which finished higher by almost 5 per cent at Rs 419.55.

Yes Bank and ONGC were the only two counters in the Sensex pack that ended in the red.

The gains saw the market capitalisation of the BSE-listed companies rising Rs 1,81,930.89 crore to Rs 1,54,55,740.67 crore.

“Most of the Asian markets were trading with a positive bias in the morning and in line with the global cues, our market started the week on a positive note,” said Ruchit Jain, equity technical analyst at Angel Broking.

“Right from the word go, the index witnessed a buying momentum ... The time-wise correction now seems to be over and, hence, we expect the momentum to accelerate from hereon to take the indices to an unchartered territory,’’ Jain said.

He added that the immediate target areas once the Nifty reaches its new high will be around 12180, followed by 12290, whereas supports will now be seen in the 12000-11950 range.

Elsewhere in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan bounced 0.7 per cent, after losing 0.4 per cent last week.

Japan's Nikkei firmed 0.7 per cent, while Australian stocks rose 0.5 per cent and Shanghai blue chips rose 0.3 per cent.

European shares rose for the second straight session following reports that Washington and Beijing were nearing a trade agreement.

The pan-European STOXX 600 index was up 0.7 per cent in the afternoon, led by trade-sensitive mining firms.

Britain’s FTSE100 index was up 0.85 per cent, Germany’s DAX rose 0.5 per cent, and France’s CAC40 index was up 0.4 per cent.