The RBI's positive outlook on the Indian economy did much to contain the markets' uneasiness seen during the past two days over government formation as the BSE Sensex on Friday went up 301 points, with Ranbaxy and ICICI Bank being the chief gainers.
The Sensex, however, came off its intra-day high of 12,219.54 due to selling pressure from foreign funds.
The BSE bellwether settled the day at 12,173.42, a net rise of 300.51 points or 2.53 per cent over its last close.
RBI Governor D Subbarao said on Thursday India's recovery will be more swift than others.
The National Stock Exchange's 50-share Nifty also spurted by 78.20 points or 2.18 per cent to close at 3,671.65 from its last close.
India's largest drugmaker Ranbaxy Laboratories logged the day's biggest gains of 8.59 per cent on expectations that the company may trim its Q2 losses with the rupee's appreciation against dollar.
Among others, India's largest private lender ICICI Bank gained 7.03 per cent, Grasim 4.96 per cent, Bharti Airtel 4.68 per cent, and L&T 4.32 per cent.
ONGC, however, dropped by 2.27 per cent.
"The results of the exit polls are vague but one thing is clear -- either the UPA or the NDA will come to power. Markets are hoping that they do well," SMC Global Vice-President Rajesh Jain said.