Hopes of an interest rate cut, coupled with a strengthening rupee and positive global cues, buoyed the Indian equity markets on Friday.
This led to a barometer index of the Indian equity markets to provisionally close the day's trade up 401 points.
Initially, both the Indian bellwether indices opened on a positive note, in sync with their Asian peers, firm crude oil prices and Bank of Japan's (BoJ) decision to maintain its stimulus program.
Markets started their upward climb after initial consolidation from Thursday's close -- when both bellwether indices closed flat.
In addition, short-covering and value buying at lower levels pushed up prices.
Investors were seen hopeful of an interest rate cut during the upcoming monetary policy review by the Reserve Bank of India (RBI) which is slated for February 2.
Expectations were backed up by BoJ's decision to go in for a negative interest rate to support the Japanese economy.
BoJ's decision came a day after the US Fed maintained its status quo on key lending rates.
Recently, the European Central Bank (ECB) indicated more stimulus measures which will be announced in March.
Besides, strengthening of rupee's value soothed investors' nerves. The rupee opened at 68.12 against a US dollar from Thursday's close at 68.23 to a greenback.
"Rupee had opened slightly stronger around 68.12 and then went on to strengthen more, on the back of easing from BoJ," said Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities, told IANS.
"BOJ lowered rates to negative zone and that triggered the reflexive risk on trade in the world financial markets."
Further, the India volatility index (VIX) dropped to the lower end of it's range.
The barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) closed higher by 401 points, or 1.64 percent.
Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) made gains during the day's trade. It rose by 140 points, or 1.87 percent, at 7,563.55 points.
The S&P BSE Sensex, which opened at 24,347.31 points, provisionally closed at 24,870.69 points (3.30 p.m.) -- up 401.12 points or 1.64 percent from the previous day's close at 24,469.57 points.
The Sensex touched a high of 24,911.90 points and a low of 24,340.06 points during the intra-day trade.
The S&P BSE market breadth favoured the bulls -- with 1,564 advances and 1,033 declines.
