With the RBI's decision on key policy rates coming on expected lines, equity markets soon made further advancement in the noon trades, as upbeat mood in other global markets propelled the Sensex to edge past the 27,000-mark.
The benchmark Sensex surged by 288 points to touch a high of 27,065.43 as investors continued to lap up banking and other frontline stocks.
At 1.05 pm, the 30-share index was traded at 27,030.31, up 252.86 points, or nearly up percent from previous close. Similarly, the broader 50-stock CNX Nifty was at 8,283.40, up 82.35 points, or 1 percent.
A short while ago, the Reserve Bank of India in its credit policy announcement kept all the key policy rates unchanged. RBI governor Raghuram Rajan while announcing the monetary policy kept repo rate, the rate at which the central bank lends to banks, unchanged at 6.5 percent, and also maintained status quo on cash reserve ratio (CRR) at 4 percent.
Maintaining his firm stance on keeping the inflation rate under control, Rajan kept the CPI inflation target for January 2017 unchanged at 5 percent.
Even as the market expects a status quo from the central bank on key policy rates, optimism in other global markets boosted sentiment back home.
Market breadth was positive with 1,363 stocks advancing against 954 declines on BSE so far.
Banking shares were the star performers with private sector lender ICICI Bank notching up gains of 3.3 percent at Rs 251.45. Similarly, SBI rose 2.7 percent to Rs 204.45 and HDFC Bank was up 0.4 percent at Rs 1,176.
Among other Sensex heavyweights, shares of Sun Pharma advanced 1.8 percent to Rs 739.10, Hindustan Unilever gained 1.7 percent to Rs 894, Tata Steel moved up 1.2 percent to Rs 341.80, ITC added 1.1 percent to Rs 359.80 and Adani Ports was up 1.1 percent at Rs 206.20.
Brokers said a firm trend at other Asian markets following overnight gains at the US markets after Federal Reserve chief Janet Yellen said the economy was still in good shape and that any increase in borrowing costs would be slow and low, bolstered the trading sentiment here.
Among other Asian markets, Hong Kong's Hang Seng was up 0.80 percent, Japan's Nikkei went up by 0.36 percent and Shanghai Composite index gained by 2.18 points in early trade today.
The US Dow Jones Industrial Average ended 0.64 percent higher in yesterday's trade.
Besides, further strength in the rupee and widening of positions by participants post the RBI's bi-monthly monetary policy review also seemed to have influenced the sentiment, said dealers.
The rupee strengthened further by 26 paise or 0.38 percent to 66.75 against the US dollar in early trade at the Interbank Foreign Exchange market today on sustained selling of the American currency by banks and exporters.
Forex dealers said besides continued selling of the greenback by banks and exporters, strong foreign fund inflows and a higher opening of the domestic equity market backed up the rupee.
The rupee had firmed up by 28 paise to close at 3-week high of 66.97 in yesterday's trade.
With agency inputs