The 30-share index, which had gained almost 400 points in opening trade, made further headway to quote 577.73 points, or 1.75%, higher at 33,596.80 at closing.
Experts believe the central bank will have to do a tightrope walk as globally interest rates are inching upwards.
Mumbai: Indian markets on Thursday surged over 1%, tracking gains in the global equity markets as risk aversion eased after the United States and China signalled a willingness to negotiate their trade dispute.
The RBI monetary policy committee on Thursday maintained status quo on the short-term lending rate - repo rate - at 6 per cent.
"GDP growth is projected to strengthen from 6.6 percent in 2017-18 to 7.4 percent in 2018-19 - in the range of 7.3-7.4 percent in first half of FY19 and 7.3-7.6 percent in second half- with risks evenly balanced", RBI said. No changes were made to cash reserve ratio (CRR) and statutory liquidity ratio (SLR), which stand at 4 per cent and 19.5 per cent, respectively. The rally extended to the broader markets as well, lifting the mid-cap index by 1.88 per cent and small-cap 1.87 per cent. In February, the consumer price inflation slowed to 4.4%, below the central bank's March projection of 5.1%.
On the other hand, Power Grid Corporation (down 0.15 per cent) and Bharti Airtel (down 0.14 per cent) remained the two stocks that closed the day slightly down. The Nifty50 of the National Stock Exchange ended at 10,325.15, gaining 196.75 points or 1.94%.
Also, investors reacted positively to RBI's decision to temporarily relax provisioning norms for lenders to defaulters undergoing bankruptcy resolution.