The Nifty index, the bluechip benchmark of 50 stocks, hit a record high on Tuesday, surpassing its previous high of 8,626.95 hit on December 4, 2014.

At its day high, the Nifty touched 8,662.75, gaining over 100 points. The BSE Sensex rose nearly 400 points to 28,658. It is now trading close to its all-time high of 28,822.

This is the fourth straight day of rally for Indian stocks since Reserve Bank Governor Raghuram Rajan cut the key repo rate in a surprise move on Thursday. Rate sensitive stocks – banks, realty and auto – have been the key driver of the rally. Strong buying by foreign investors, who have pumped in a net of Rs 3,200 crore in the last three trading sessions, have also contributed to the upsurge, analysts say.

Dipan Mehta, a member of BSE & NSE, said the positive momentum from RBI rate cut continues to drive the markets and foreign investors have also turned active buyers.

Nomura’s Prabhat Awasthi added: “The improvement in India’s macro environment over the past year is durable and will improve further. The lagged effect of the much-needed complete overhaul of the political economy is a significant tailwind.” said.

Nomura expects the Sensex to rise by 20 per cent to 33,500 in 2015.

Banking stocks attracted strong buying action, with Bank Nifty index rising 0.90 per cent. Analysts say that banking stocks would be a big beneficiary of an easing of RBI’s monetary policy.

Among banking and financial services stocks, HDFC surged 6 per cent while Axis Bank rose nearly 3.5 per cent.

Metal stocks outperformed today with the BSE Metal index surging 2.5 per cent. Metal stocks advanced after China reported its economy had not slowed as much as many had feared. Sesa Sterlite surged nearly 5 per cent while Tata Steel rose 3.5 per cent.