Sensex surges over 700 points

MUMBAI, Jan 15 (Reuters): The BSE Sensex and Nifty rose more than 2.5 per cent on Thursday, marking their biggest daily gain in eight months, after blue-chips led by interest rate-sensitive stocks surged on hopes the central bank's surprise rate cut will stoke growth.
The NSE bank index rose as much as 4.3 per cent to a record high of 19,410.40 after the Reserve Bank of India (RBI) cut interest rates by 25 basis point and signalled it could cut further, amid cooling inflation and the government's efforts to contain fiscal deficit.
Lower borrowing costs supported by a steep fall in commodity prices, especially crude oil, are expected to boost Prime Minister Narendra Modi's plans to kick-start investments and earnings in Asia's third largest economy.
The Sensex rose as much as 3.1 per cent during the day before ending 2.66 per cent higher.
The broader Nifty ended up 2.62 per cent after earlier rising as much as 3 per cent.
The indexes marked their biggest daily gains since May 9, 2014.