After reclaiming the 60,200 level, the 30-share Sensex was trading 524 points or 0.88 percent higher at 60,201.83. Similarly, the Nifty rose 149.45 points or 0.84 percent to 17,939.80.
Tata Steel was the top gainer in the Sensex pack, rising over 2 percent, followed by Infosys, TCS, Reliance Industries, HCL Tech, and Bajaj Auto.
On the other hand, HUL, NTPC, Titan, and Nestle India were the laggards.
Rate-sensitive banking and auto indices were trading on a positive note, while the realty index was in the red.
The Reserve Bank of India (RBI) has decided to keep the benchmark interest rate unchanged at 4 percent but maintained an accommodative stance even as the economy is showing signs of recovery after the second COVID wave.
This is the eighth time in a row that the Monetary Policy Committee (MPC), headed by RBI Governor Shaktikanta Das, has maintained the status quo.
The RBI policy, as expected, remained cautious and in a wait-and-watch mode, said Suvodeep Rakshit, Senior Economist, Kotak Institutional Equities.
''Even as it increased the quantum under the 14-day variable rate reverse repo (VRRR) auctions and opened the option of 28-day VRRR auctions, it adequately sounded out on its dovishness and the need to ensure liquidity conditions remain comfortable," he noted.
He does not see the RBI in a hurry to normalize liquidity conditions as well as the reverse repo rate in the near term. ''We continue to see the February policy as the earliest period of review for the RBI to narrow the policy rate corridor by raising the reverse repo rate.''