Benchmark indices bounced back in the morning trade on Friday, with the Sensex climbing 547 points after the Reserve Bank of India's policy announcement.
RBI on Friday raised the benchmark lending rate by 50 basis points to 5.90 per cent in a bid to check inflation, which has remained above its tolerance level for the past 8 months.
Recovering the early lost ground, the 30-share BSE benchmark jumped 547.46 points to 56,957.42 points in the morning trade.
Similarly, the broader NSE Nifty bounced back and quoted 151.85 points higher at 16,969.95 points.
With the latest hike, the repo rate or the short term lending rate at which banks borrow from the central bank is now close to 6 per cent.
In all, RBI has raised benchmark rate by 1.90 per cent since May this year.
"The Monetary Policy Committee (MPC) delivered 50 bps hike in-line with expectations," Madhavi Arora, Lead Economist at Emkay Global Financial Services, said.
Among the 30-share Sensex pack, Power Grid, Kotak Mahindra Bank, UltraTech Cement, HDFC Bank, Reliance Industries and State Bank of India were among the gainers.
However, Asian Paints, Tata Consultancy Services, Tech Mahindra, Wipro and HCL Technologies were the laggards.
"The 50 bps rate hike by the RBI in today's meeting was in-line with expectations. The key highlights were the resilience shown by the Indian economy considering the turbulent global environment and concerns emanating from global growth slowdown and hawkish stances of various central banks," Santosh Meena, Head of Research at Swastika Investmart Ltd, said.
Elsewhere in Asia, markets in Seoul, Tokyo, Shanghai and Hong Kong were quoting lower.
The US markets had ended sharply lower on Thursday.
The BSE benchmark fell 188.32 points or 0.33 per cent to settle at 56,409.96 points on Thursday. The Nifty dipped 40.50 points or 0.24 per cent to end at 16,818.10 points.
Meanwhile, the international oil benchmark Brent crude futures declined 0.68 per cent to USD 87.89 per barrel.
Foreign institutional investors offloaded shares worth Rs 3,599.42 crore on Thursday, according to data available with BSE. PTI SUM.