Shares ended up 1.9% on Tuesday to their highest close in over two and a half months, as carmakers, infrastructure firms and developers cheered the possible end of a monetary tightening cycle that has hurt demand in the country. The RBI raised interest rates for the 13th time since early 2010 to battle stubbornly high inflation but signalled it may end its hawkish stance that has put it at odds with peers concerned about weak global growth. Markets are up on the fact that this is probably the last hike from the RBI and what it has said about being sympathetic to growth, said Abhishek Patel, equity analyst at ITI Securities.

The Sensex closed up 1.86% or 315.58 points at 17,254.86 points. Only three of its components closed in the red.

The stock markets will open for a 90 minute special trading session on Wednesday. The markets will be closed on Thursday on account of Diwali.

EU policymakers appear to be inching towards a deal on bank recapitalisation and rules for using the European Financial Stability Facility, driving gains for Indias IT stocks for a second consecutive day. The countrys flagship IT sector has been looking to increase its sales in Europe, its second-largest export market, to hedge against US exposure.

Infosys, the countrys second-largest software services firm, and a bellwether of the countrys $76-billion IT industry, closed up 3.3% at R2,858.70, having risen as much as 4.8%. Tata Consultancy Services, the market leader, closed up 1.8% at R1,098.65, with rival Wipro ending the day at R372.15, a gain of 3.9%.

Automakers, who have been hit with a slowdown in demand over the past quarter caused by the high cost of borrowing, saw their shares rise after the central bank said ithe likelihood of a rate move in December is low.