A benchmark index for Indian equities surged almost 800 points in this week's trading, the sharpest rally in over a year, as foreign institutions invested heavily on the back of strong macro-economic outlook.

The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) rallied 795.09 points or 4.23 per cent in the weekly trade. The index closed in the positive four out of the five trading sessions.

Strong inflow of funds from the foreign institutional investors has led the rally at the Indian bourses for the second successive week. The country's benchmark index has gained 1,373 points in the last two weeks of trading.

Finance Minister Pranab Mukherjee said on Thursday that the Indian economy would grow by 8.5 per cent during the current fiscal and 9 per cent in 2011-12. It grew by 8.8 per cent in the first quarter of fiscal 2010-11.

Sensex advanced 177.26 points or 0.91 per cent to 19,594.75 on Friday, the highest closing level in 34 months.

On the last trading day of the week, of the 30 stocks trading in the Sensex, 24 advanced while six closed in the red.

Reliance Comm went 5.28 per cent up at Rs 166.45; ACC 3.24 per cent higher at Rs 997.55; Bharti Airtel up 2.93 per cent at Rs 357.90; RIL up 2.58 per cent at Rs 1,026.75; and Sterlite Inds up 2.09 per cent at Rs 173.25. These were among the major gainers in percentage terms at the Sensex.

At the National Stock Exchange (NSE), the broader 50-share S&P CNX Nifty closed 0.97 per cent or 56.25 points higher at 5,884.95 points Friday.

Most Asian markets advanced on the last trading day of the week, with Japan's Nikkei rising 1.23 per cent at 9,626. Hong Kong's Hang Seng closed 1.29 per cent higher at 21,971.

The bourses in the US also ended the week on a positive note. Dow Jones industrial index closed 0.12 per cent higher at 10,608. S&P 500 advanced 0.08 per cent at 1,125.59 and Nasdaq closed 0.54 per cent higher at 2,315.61.

However, the European bourses closed in the red. The FTSE 100 fell 0.57 per cent to close at 5,508.45 points.

The German DAX closed 0.64 per cent down at 6,209 points and the French CAC 40 declined 0.38 per cent to 3,722.02 points.