After a higher start at 20,094.21, the Sensex touched day's high of 20,094.21 before closing at 19,983.61 – up 88.51 points, or 0.44 per cent. This is the highest closing level since September 20 (20,263.71).
Gainers were led by Bharti Airtel, ICICI Bank, Infosys, ITC, Jindal Steel, NTPC and Oil & Natural Gas Corpn (ONGC). In the overall 30-share Sensex, 13 stocks advanced and 16 ended lower while Reliance Industries settled almost unchanged.
"The Reserve Bank of India's (RBI) measures to ease liquidity will benefit banks as they enter the 'busy' credit season. The gradual unwinding of July's extraordinary liquidity squeeze also reflects RBI's growing confidence in managing the current account deficit in the short-term," said India Ratings & Research.
On similar lines, the broad-based National Stock Exchange index Nifty closed higher by 22.25 points, or 0.38 per cent, at 5,928.40, after touching a high of 5,981.70. Also, SX40 index, the flagship index of MCX-SX, gained 48.17 points to end at 11,904.62.
Brokers said a firming trend in the Asian region further supported the uptrend. Meanwhile, the rupee was trading almost flat at 61.89 versus the US dollar.
Sectorally, the BSE Realty sector index gained the most by rising 1.57 per cent, followed by capital goods index (1.32 pc), FMCG index (0.78 pc), power index (0.76 pc) and banking (0.67 pc).
Yesterday, the RBI announced it is reducing the marginal standing facility rate by a further 50 basis points to 9.0 per cent with immediate effect. It also said it would provide additional liquidity through term repos of 7-day and 14-day tenor for a notified amount equivalent to 0.25 per cent of net demand and time liabilities of the banking system through variable rate auctions on every Friday beginning October 11.