The benchmark BSE Sensex rallied 374 points driven by fresh buying mainly in realty, healthcare, banking, metal and power amid mixed Asian cues as WPI inflation fell for July.
Wholesale price index-based inflation plunged to (-)4.05 per cent in July, from (-)2.40 per cent in June.
The latest set of numbers followed data earlier this week which showed retail inflation eased in July, which raised hopes for a possible rate cut by RBI.
The Sensex resumed higher at 27,668.06 and firmed up to 27,959.33 before quoting at 27,923.43 at 1208 hours, a gain of 373.90 points, or 1.36 per cent.
The 50-share Nifty jumped 125.90 points, or 1.51 per cent, to 8,481.75 at 1208 hours.
The standout performer was Sun Pharma (up 3.26 per cent) as Vedanta, Bajaj Auto and HDFC too gained.
In overseas markets, Asian stocks were trading mixed in early trade. US stocks closed mostly lower yesterday following a choppy session marked by narrow gains and losses as readings on retail sales and jobless claims suggested that the US economy is on a healthy footing.
Meanwhile, foreign portfolio investors (FPIs) net sold shares worth Rs 625.90 crore yesterday, provisional exchange data showed.
