Banking stocks outshone others in an overall buoyant market as all the 13 listed financial scrips surged in the range of 5.13-22.54 per cent.
Shares of Yes Bank skyrocketed by 22.54 per cent to Rs 386.80, while Union Bank gained by 10.03 per cent to Rs 139.35 on the BSE. Among blue-chips, PNB soared 9.18 per cent, SBI (8.07 per cent), ICICI Bank (6.55 per cent) and HDFC Bank (5.13 per cent).
Besides, BOB rallied 8.97 per cent, Bank of India (8.46 per cent), Canara Bank (8.46 per cent), Kotak Mahindra Bank (8.33 per cent.)
Led by the rally in these stocks, the BSE banking index gained 6.78 per cent to 12,697.83.
Realty stocks also saw hectic buying, with Indiabulls Real Estate rising 9 per cent, Unitech (7.29 per cent), DLF (6.82 per cent) and D B Realty (5.33 per cent).
The BSE realty index gained 5.34 per cent to end the day at 1,377.05.
All eyes are on new Reserve Bank Governor Raghuram Rajan who will come out with his maiden monetary policy review tomorrow amid conflicting demands for rate cut and an urgent need to contain inflation which soared to 6-month high of 6.1 per cent in August.
Much to Rajan's comfort, the US Federal Reserve has decided against tapering its monetary stimulus - under which it has been buying assets worth USD 85 billion every month - giving him space to go ahead with steps to arrest declining economic growth.
RBI policy meet was pushed back by two days in view of the Fed's crucial meeting.
"Due the surprising decision by the Fed to not taper down on its Quantitative Easing programme, equity markets responded positively. Banking sector has led the rally with virtually all banking stocks advancing," said Raghu Kumar, co-founder RKSV Securities.
"Economists were strongly expecting at least some tapering by the Fed on its QE programme. This now gives some suspense on what RBI Governor Rajan's next move will be, seeing that due to rupee strengthening, it is likely that the
RBI will be hawkish in its tone in its attempts to focus on bringing down the inflation rate," Kumar added.
The BSE 30-stock index, Sensex, closed at 20,646.64, up 684.48 points.