The benchmark index of the Bombay Stock Exchange (BSE), Sensex rose by an impressive 400 points on Tuesday on hopes that the central bank might cut interest rates soon.

The rise of 400 points is the biggest increase recorded by the benchmark in a period of six months. Sensex was trading at 395 points at 18,753 today recording its biggest gain in a single day since September, 2012.  The Nifty index of 50 shares at the National Stock Exchange (NSE) increased 200 points in the early morning trade. The NSE Nifty was trading 125 points higher at 5,693 this afternoon.

Experts said that the falling prices of crude oil and gold will reduce the country's current account deficit, giving more boost to the stock market in the country. There are indications that the improved position in the current account position will allow the government to strengthen its financial position.

It is likely that the Reserve Bank of India will soon cut its key lending rates to boost the economic growth after a prolonged period. The industry members have been demanding a rate cut since several months and indications that the RBI might consider cutting its rates during the next meet has boosted sentiment in the markets.