Benchmark Sensex surged 577 points to end at 33,597 today after the RBI kept the policy rate unchanged and lowered the inflation forecast.
The central bank kept the interest rate unchanged at 6 per cent for the fourth consecutive time since August last year, but lowered retail inflation projection for the first half of current fiscal to 4.7-5.1 per cent and 4.4 per cent for the second half.
The repo rate, at which the central bank lends short-term money to banks, will continue to stay at 6 per cent. The reverse repo rate, at which it borrows from banks and absorbs excess liquidity, will remain at 5.75 per cent.
The Reserve Bank also said India's economic growth rate is expected to strengthen to 7.4 per cent in the current fiscal, from 6.6 per cent in 2017-18, on account of revival in investment activity.
The BSE Sensex took off on a positive note at 33,289.96 and advanced to the day's high of 33,637.46 before ending at 33,596.80, up 577.73 points, or 1.75 per cent.
This is its biggest single day gain since March 12 when it had rallied 610.80 points. The gauge had lost 351.56 points in the previous session.
The NSE Nifty, after shuttling between 10,331.80 and 10,227.45, finally settled 196.75 points, or 1.94 points higher at 10,325.15.
The markets also cheered the 'normal" southwest monsoon forecast by private weather forecasting agency Skymet.
Positive global cues as trade war worries between the US and China faded too bolstered trading sentiment.