mumbai, Nov. 21 -- Optimism lit up the Street on Thursday as the Nifty touched a 13-month high, with index heavyweights surging as the US-trade deal appeared closer than ever before. Buying in large caps and derivatives short-covering may sustain the rally, experts said, even as caution prevails over how long the rally lasts. The Nifty pushed past 26,200 for the first time since its intraday lifetime peak of 26,277.35 on 27 September last year. Powered by HDFC Bank and Reliance Industries, the Nifty closed 0.54% higher at 26,192.15, near its record close of 26,216.05 on 26 September, 2024. The Sensex closed 0.52% higher at 85,632.68, a whisker away from its own peak of 85,836.12. HDFC Bank has a 12.78% weight in the Nifty while Reliance has 8.53%. The rally was led by cash buying as well as derivatives short-covering, exchange data showed. Foreign portfolio investors (FPIs) net bought a provisional Rs.283.65 crore worth of shares, while DIIs lapped up Rs.824.46 crore. FPIs cut their net bearish index futures bets by buying back contracts worth Rs.405 crore. FPIs also turned a tad more optimistic, increasing bullish call options on Nifty and Bank Nifty to 56,530 contracts on Thursday from 22531 the previous day. Analysts now expect the rally to be led by fresh buying in large-caps like Reliance, which ended Thursday just 10 paise short of its fresh 52-week high of Rs.1,551. HDFC Bank, which closed at Rs.1,008.85, also hovers a few points below its 52-week high of Rs.1,020.5 hit on 23 October. Another reason for the rekindled optimism is the return of FPIs. After selling for three months in a row since July, FIIs turned net buyers in October, scooping up Rs.10,167.46 crore of equities, followed by another Rs.500.70 crore so far in November, showed NSDL data. As of Thursday, FPIs' cumulative net short index futures stood at 165,565 contracts. Covering a part of these can also take the Nifty and Sensex to new highs. Saurabh Mukherjea, chief investment officer and co-founder at Marcellus Investment Managers, is cautiously optimistic. Though he expects things to improve, he thinks it is too early to get carried away. The December earnings season will be the real moment of truth, especially with markets betting on a return to double-digit growth after nearly 10 dull quarters, he said. If earnings don't reflect the benefits of the GST cuts, "the mood could sour quickly," he warned....