The Bombay Stock Exchange benchmark Sensex extended its gains by 408 points at mid-session on Tuesday, backed by banking stocks, after the Reserve Bank left its overnight lending rate unchanged to tame inflation.
While the Sensex surged by 408.39 points to 17,424.35, the banking sector index jumped by 251.59 points to 9,068.43 at 1330 hours.
The wide-based National Stock Exchange index, Nifty, also rose by 105.45 points to 5,195.10.
Housing Development Finance Corp (HDFC), a mortgage lender, posted its steepest rise in almost three weeks to Rs 1535.10, up by Rs 17. State Bank of India, the nation's largest bank in terms of by assets, rose to its strongest level since March 12 to Rs 1,787, up by Rs 50.35.
Country's largest private sector lender ICICI Bank went up by Rs 21.05 to Rs 916.
The Reserve Bank of India today increased the percentage of cash the banks should keep reserved by 0.25 per cent to 8.25 per cent from 8 per cent to suck out access liquidity from the system. It has however kept the key short-term inter-bank lending rates unchanged.
This is the second time in two weeks that the apex bank has raised CRR rates.