Mumbai, Jan. 29: The Bank of Japan's decision to bring down its benchmark rate below zero today led to a rally in the global and domestic stock markets.

The Sensex surged 401 points to log its first weekly gain this year, while the Nifty reclaimed the 7500-mark and ended with gains of nearly 139 points.

The year had begun on a disappointing note with equity prices coming under pressure owing to concerns over sliding crude oil prices, slowdown in China and lacklustre corporate results back home.

Japan, however, offered a relief to investors when the country's central bank governor Haruhiko Kuroda adopted a negative interest rate policy to spur lending and bring the economy out of the clutches of deflation. Experts said the development could lead to more liquidity flowing to markets such as India.

"The rally on the last day of the week, which contributed 1.6 per cent, or 43 per cent, to the gains of the week was driven by a negative interest rate decision by the Bank of Japan and a promise to continue printing currency that can fuel a larger Yen-carry trade,'' Ravi Shenoy, assistant vice-president (midcap research) of Motilal Oswal Securities, said.

Carry trade is a practice where traders borrow in currencies where interest rates are low and invest in countries where they are high.

After opening in the negative zone at 24347.31, the Sensex staged a comeback to hit the session's high of 24911.90 on across-the-board buying tracking positive Asian cues. It ended with gains of 401.12 points, or 1.64 per cent, at 24870.69. The Nifty hit an intra-day high of 7575.65 before settling at 7563.55, a gain of 138.90 points, or 1.87 per cent.

The rupee, too, snapped its three-day losing streak and recovered 45 paise to close at 67.78 per dollar on fresh selling of the US currency by banks and exporters in view of the sharp recovery in equities.