All-round buying after wholesale inflation declined to a five-month low lifted the benchmark Sensex on Wednesday by nearly 257 points to its highest level since December 9 on hopes the RBI will lower interest rate to boost economic growth.
The NSE barometer Nifty also jumped over 79 points to reclaim the 6,300-point mark as it ended at 6,320.90.
Supported by gains in rate-sensitive banking, realty and auto sector stocks, the 30-share BSE Sensex rallied by a whopping 256.61 points, or 1.22%, to end at 21,289.49, its highest closing since 21,326.42 on December 9.
Overall, 29 out of 30 Sensex-based scrips closed higher. HDFC and L&T led the gainers, while Tata Steel closed flat.
Other prominent gainers included Tata Motors, Hero MotoCorp, BHEL, Sesa Sterlite and Cipla.
Yesterday, Sensex had lost 101.33 points on profit-taking.
Brokers said along with the rising trend in other Asian and the European markets after the World Bank raised its global growth forecast, wholesale inflation declining to a five-month low of 6.16% in December, raised hopes that the Reserve Bank will ease interest rates and prop up growth.
However, profit-booking by some traders at higher levels, trimmed gains in some stocks, they added.
Shares of state-owned Coal India Ltd ended 1.81% higher after the company declared an interim dividend of Rs 29 per share, or a record 290%, for 2013-14. It had soared over 6% in early trade.
Out of 13 sectoral indices, 10 barometers closed with gains between 0.37% and 1.98%.
The BSE Capital goods sector index rose 1.98%, Banking index by 1.59%, Realty index by 1.31% and Auto index by 1.22%.
Shares of Yes Bank ended 1.95% higher after bank reported 21.4% rise in net profit at Rs 415.6 crore for its third quarter ended December 2013.