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Benchmark equity indices Sensex and Nifty climbed over 2 per cent to settle at record closing high levels on Friday after the Reserve Bank of India (RBI) revised upwards the GDP growth projection to 7.2 per cent for 2024-25 from 7 per cent earlier.
The 30-share BSE Sensex jumped 1,720.8 points, or 2.29 per cent, to hit a new record peak of 76,795.31 in day trade.
The benchmark ended at 76,693.36, up 1,618.85 points, or 2.16 per cent.
The NSE Nifty climbed 498.8 points, or 2.18 per cent, to 23,320.20 during the day and is just 18.5 points from hitting its record high level.
It settled with a jump of 468.75 points, or 2.05 per cent, at 23,290.15.
IT and interest rate-sensitive bank, realty, and auto stocks ended with sharp gains.
The RBI left its key interest rates unchanged on Friday as expected, keeping the focus on inflation amid robust economic growth that is likely to provide the new Modi government headroom for manoeuvring reforms.
The Monetary Policy Committee, consisting of three RBI and an equal number of external members, kept the repo rate unchanged at 6.50 per cent for an eighth straight policy meeting and stuck to its relatively hawkish stance of "withdrawal of accommodation", Governor Shaktikanta Das said in his statement.
With the Indian economy, Asia's third-largest, growing faster than expected in the previous year, the RBI raised its GDP growth projection for the current fiscal through March 2025 to 7.2 per cent from 7 per cent while maintaining its inflation forecast at 4.5 per cent.
"The anticipation of stability within the coalition government at the centre, coupled with the RBI's upward revision of its growth forecast for FY25 to 7.2 per cent, fuelled a broad-based rally in the domestic market.
"The Indian market surpassed its previous record high set on exit-poll day and reached a fresh peak," said Vinod Nair, head of research, Geojit Financial Services.
All the 30 Sensex companies ended in the positive territory, with Mahindra & Mahindra, Wipro, Tech Mahindra, Bharti Airtel, Infosys and Tata Steel emerging as the biggest gainers.
In Asian markets, Seoul, and Shanghai settled with gains while Tokyo and Hong Kong ended lower.
Global oil benchmark Brent crude climbed 0.04 per cent to $79.95 a barrel.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 6,867.72 crore on Thursday, according to exchange data.