Benchmark indices Sensex and Nifty closed higher on Thursday, extending the winning streak to the fifth straight session after the RBI unexpectedly kept policy rates unchanged as global banking woes added uncertainty to the economic outlook.

Buying in index majors HDFC Bank and Reliance Industries also added to the optimism in the equity market.

Bouncing back from early fall, the 30-share BSE Sensex rose by 143.66 points or 0.24 per cent to settle at 59,832.97. During the day, it advanced 260.75 points or 0.43 per cent to 59,950.06.

The broader NSE Nifty gained 42.10 points or 0.24 per cent to finish at 17,599.15 after falling in initial trade.

After raising interest rate by a cumulative 250 basis points in 11 months, the Reserve Bank of India (RBI) on Thursday unexpectedly kept benchmark rate unchanged as global banking woes added uncertainty to the economic outlook.

RBI Governor Shaktikanta Das however pledged to hike interest rate again if needed, saying the decision to pause was "for this meeting only".

The RBI's six-member Monetary Policy Committee voted unanimously to keep the repurchase or repo rate unchanged at 6.50 per cent.

Most analysts had expected one final hike of 25 basis points in RBI's current tightening cycle before hitting a pause.

"RBI's pause is like Sachin stroke on a tricky pitch but with eyes set in and having the luxury of hitting the ball where ever he wanted. RBI had the option of a rate hike or a pause. The pause was not entirely unexpected.

"RBI will watch developments and data before taking the next call. The market expects RBI to fetch maximum run and win the match on inflation and growth, no matter which direction they hit the ball," said Nilesh Shah, MD, Kotak Mahindra Asset management Company Ltd.

Among the Sensex firms, Bajaj Finance emerged as the biggest gainer by climbing 2.95 per cent. Tata Motors, Bajaj Finserv, IndusInd Bank, Sun Pharma, Mahindra & Mahindra, State Bank of India, Larsen & Toubro, HDFC, HDFC Bank, Maruti, Reliance Industries and Bharti Airtel were the other major winners.

HCL Technologies, Axis Bank, ICICI Bank, Tech Mahindra and Titan were among the laggards.

RBI astonished the market by pausing policy rates; nonetheless, there was some talk about this unexpected statement, which keeps it ahead of other major central banks across the world, said Santosh Meena, Head of Research, Swastika Investmart Ltd.

"The market is in a good mood, and this policy provides us with further cause to rejoice. However, given that we have witnessed a good recovery from recent lows and that we have a long weekend and a weekly expiry, some profit-taking or consolidation cannot be ruled out," Meena added.

In Asian markets, Seoul, Japan and Shanghai ended lower, while Hong Kong settled in the green.

European equity markets were trading in positive territory during the afternoon trade. The US markets ended mostly lower on Wednesday.

"The Reserve Bank of India has made a prudent decision to pause the rate hike, considering the uncertainty prevailing in the global financial market and the potential challenges that may arise for India's growth due to the lack of clarity on the El-Nino phenomenon. The RBI's decision to take a pause is aimed at supporting growth in the economy.

"While the Governor of the RBI has indicated that the pause in the rate hike is applicable only for this meeting, the central bank remains highly vigilant about the growth in the economy and will assess the situation carefully before taking any future rate hikes. In these uncertain times, the RBI recognizes that another rate hike could potentially hamper the growth momentum of the economy," said Sunil Damania, Chief Investment Officer, MarketsMojo.

The Sensex had surged 582.87 points or 0.99 per cent to settle at 59,689.31 on Wednesday. The Nifty had jumped 159 points or 0.91 per cent to close at 17,557.05.

Meanwhile, global oil benchmark Brent crude dipped 0.54 per cent to USD 84.53 per barrel.

Foreign Portfolio Investors (FPIs) bought equities worth Rs 806.82 crore on Wednesday, according to exchange data.

Except for the headline, this story has not been edited by The Telegraph Online staff and has been published from a syndicated feed.