Strong buying by foreign investors, who have pumped in a net of Rs 3,200 crore in the last three trading sessions, have also contributed to the upsurge, analysts say.
The Nifty rose as much as 157 points to hit 8700 levels for the first time. The Sensex also surged over 550 points to a new high of 28,829.29.
Dipan Mehta, a member of BSE & NSE, said the positive momentum from RBI rate cut continues to drive the markets and foreign investors have also turned active buyers.
Nomura’s Prabhat Awasthi added: “The improvement in India’s macro environment over the past year is durable and will improve further. The lagged effect of the much-needed complete overhaul of the political economy is a significant tailwind.” said. The brokerage expects the Sensex to rise by 20 per cent to 33,500 in 2015.