The NSE Nifty, after shuttling between 10,698.35 and 10,587.50, finished the session 91.50 points, or 0.86 per cent higher at 10,684.65.
The BSE Sensex surged almost 276 points to end above the key 35,000-mark on Wednesday even as the RBI hiked the policy rate by 0.25 per cent on inflation concerns.
However, the RBI retained the GDP growth forecast for 2018-19 at 7.4 per cent on hopes of further boost to investments and higher consumption.
The central bank hiked the benchmark lending rate for the first time in four-and-half-years on inflation concerns arising from a surge in international oil prices.
The repo rate now stands at 6.25 per cent.
The BSE Sensex, which opened strong at 34,932.49, fell after RBI's policy announcement but soon recovered to touch the day's high of 35,230.54.
It finally ended at 35,178.88, up 275.67 points, or 0.79 per cent.
The gauge had lost 419.17 points in the previous three sessions.
On similar lines, the NSE Nifty, after shuttling between 10,698.35 and 10,587.50, finished the session 91.50 points, or 0.86 per cent higher at 10,684.65.
Meanwhile, domestic institutional investors (DIIs) bought shares worth a net Rs 474.33 crore, while foreign portfolio investors (FPIs) sold shares worth Rs 157.51 crore on Tuesday, as per provisional data.
Photograph: Shailesh Andrade/Reuters