Indian equities markets closed near the day's high with a key index ending 500 points higher, buoyed by hopes of an end to the rate tightening cycle and European leaders coming to an agreement on measures to curb the debt crisis in the region.
The Reserve Bank of India had in its second quarterly review of the monetary policy said it would not hike rates further if inflation started coming down from December as it expected.
The 30-scrip sensitive index (Sensex) of the BSE, which opened higher at 17,671.86 points, closed at 17,788.79 points (provisional), up 499.96 points or 2.89% from its previous close at 17,288.83 points.
It had risen to an intra-day high of 17,908.13 points in morning trade.
The 50-scrip S&P CNX Nifty of the National Stock Exchange also closed similarly higher, 152 points or 2.92% up, at 5,353.8 points.
Broader markets were also in the green with the BSE 500 index ending 2.42% up. The BSE midcap index closed 1.5% up, while the BSE small cap index ended 0.84% higher.