Equity benchmark Sensex climbed over 350 points to reclaim the 63,000 mark on Wednesday, propelled by robust buying in metal, energy and FMCG stocks amid a mixed trend in global equities.
Fresh foreign capital inflows and a strengthening rupee also supported the domestic equity markets, traders said.
Rising for the fourth straight session, the 30-share BSE Sensex climbed 350.08 points or 0.56 per cent to settle at 63,142.96. During the day, it jumped 403.55 points or 0.64 per cent to 63,196.43.
The NSE Nifty advanced 127.40 points or 0.68 per cent to end at 18,726.40.
"Investors are becoming more optimistic due to the anticipation of a positive revision in the RBI’s inflation forecast during the ongoing MPC meeting. It is expected that the RBI will maintain its pause on rate hikes, considering the significant improvement in inflation, which has now come within the RBI's comfort zone.
"Furthermore, the participation of FIIs as net buyers, after a brief halt, contributed to today's market rally, particularly driven by mid-and small-cap stocks," said Vinod Nair, Head of Research at Geojit Financial Services.
Nestle was the biggest gainer on the Sensex chart, rising nearly 3 per cent, followed by Tata Steel, Tata Motors, Bharti Airtel, Larsen & Toubro, Power Grid, NTPC, Tata Consultancy Services, Tech Mahindra, Infosys and Axis Bank.
On the other hand, Kotak Mahindra Bank, Maruti, Bajaj Finance, Mahindra & Mahindra and ICICI Bank were the laggards.
In the broader market, the BSE smallcap gauge climbed 1.15 per cent and the midcap index climbed 1.09 per cent.
"Markets rallied sharply and witnessed broad-based buying support ahead of the credit policy with the Sensex ending past the crucial 63000-mark. Upbeat moves prevailed throughout the session as investors are hoping for a rate hike pause amid an improving domestic macroeconomic situation.
"All eyes will be on the RBI’s growth outlook and inflation projection for the year, and in case there is any downgrade in inflation expectations, optimism is likely to persist," said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd.
All indices ended in the green, where telecommunication jumped 2.99 per cent, metal jumped 1.70 per cent, realty (1.52 per cent), oil & gas (1.34 per cent), power (1.25 per cent), energy (1.06 per cent), FMCG (1.06 per cent), commodities (0.95 per cent), healthcare (0.93 per cent), consumer discretionary (0.81 per cent) and IT (0.83 per cent).
"Global stock markets were mixed on Wednesday as weak Chinese trade data had investors fretting about softening global demand, while at the same time expecting Chinese Govt to undertake measures to stimulate its economy," said Deepak Jasani, Head of Retail Research, HDFC Securities.
In Asian markets, Seoul, Shanghai and Hong Kong ended in the green, while Tokyo settled lower.
Equity markets in Europe were trading on a mixed note. The US markets ended in positive territory on Tuesday.
The Reserve Bank's rate-setting monetary policy panel began deliberations on Tuesday and the decision would be announced on June 8.
Global oil benchmark Brent crude climbed 0.10 per cent to USD 76.45 a barrel.
Foreign Institutional Investors (FIIs) bought equities worth Rs 385.71 crore on Tuesday, according to exchange data.
The rupee gained 5 paise to settle at 82.55 (provisional) against the US dollar on Wednesday.
"Markets are gradually inching higher along with a lot of action in the mid and small-cap space. We expect the northbound journey to continue in the index on back better than expected macro data and supportive global cues.
"Rural and agri-related stocks are likely to be in focus with the arrival of monsoon in India, which is expected to be normal this year," Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd, said.
Except for the headline, this story has not been edited by The Telegraph Online staff and has been published from a syndicated feed.