The Sensex and the Nifty surged over 1.2 per cent at the closing session on Wednesday as RBI Governor Raghuram Rajan surprised the equity market by leaving the repo rate and CRR unchanged at 7.75 per cent and 4 per cent, respectively in the mid-quarter monetary policy review.

The 30-share BSE index was up 247.72 points or 1.2 per cent at 20,859.86 and the 50-share NSE index was up 78.1 points or 1.27 per cent at 6,217.15.

All BSE sectoral indices ended in the green. Among them, realty, capital goods, oil & gas and power sector stocks led the Sensex rally and were up 3.51 per cent, 2.61 per cent, 2.15 per cent and 2.09 per cent, respectively.

BHEL, Tata Power, Bajaj Auto, Hero MotoCorp and L&T were the top five Sensex gainers, while Jindal Steel, SSLT and ICICI Bank were the only three losers.

A report by India Forex Advisors said: “Most of the recent US economic releases suggest that the beginning of the withdrawal of the Fed's massive bond-buying programme is coming sooner than later and today's meeting could end some of the uncertainty over the timing and scale of stimulus-tapering.

This meeting of the Federal Reserve will be very significant as it will be the last one headed by Ben Bernanke as his term comes to an end. January onwards, Janet Yellen will be taking the charge as the Fed Chairperson, and she is likely to support quantitative easing.”

European and Asian shares rose as investors await a Federal Reserve decision on its stimulus programme.