The NSE Nifty 50 index rose 0.97% to 14,789.95, while the benchmark S&P BSE Sensex was up 0.92% at 50,255.75. Both the indexes touched record intra-day highs earlier in the session after rising as much as 1.5% and 1.46% respectively.
The Nikkei/IHS Markit Services Purchasing Managers' Index rose to 52.8 in January from 52.3 in December, staying above the 50-level mark separating growth from contraction for the fourth straight month.
Home loan provider Housing Development Finance Corp rose 1.7% and was the top boost to the index.
Gains in lenders HDFC Bank and Axis Bank of 0.9% and 2.7% helped the Nifty Bank index end the day 1.4% higher.
Venky's, the country's biggest poultry producer, jumped as much as 16% after swinging to a profit of 1.07 billion rupees in the third quarter.
Drugmaker Dr.Reddy's Laboratories, which has a partnership to distribute Russia's Sputnik V coronavirus vaccine in India, ended the day 3.7% higher after the company said it will seek emergency-use authorisation for the vaccine by next month.
Personal care products maker Bajaj Consumer Care rose 20% after its quarterly profit rose 17.5% to 573 million rupees.
Shares in Future Retail fell 5% after a court blocked Future Group's retail asset sale to Mukesh Ambani-led conglomerate Reliance Industries on objections raised by U.S. e-commerce giant Amazon.com Inc.
That prompted Future to warn that if it is unable to sell the assets, $4 billion in bank loans and debentures would be at risk, pushing its retail unit into insolvency.
(Reporting by Philip George in Bengaluru; Editing by Shailesh Kuber and Maju Samuel)