It was fruitful day for the Indian equity market benchmarks that surpassed their previous high records in terms of intraday high as well as closing records. BSE's Sensex jumped 553.42 points or 1.39 percent to close at 40,267.62, while NSE's Nifty 50 rose by 165.75 points to end at 12,088.55. Both the indices have crossed their 40,000 and 12,000 marks for the first time at closing time.

In the afternoon session, Sensex as well as Nifty touched their fresh time highs of 40,308.90 and 12,103.05, respectively.

Experts suggest that the surge was on hopes of a rate cut ahead of RBI's monetary policy review meeting.

The gains were led by HDFC twins and Reliance Industries Limited. Ten out of eleven sectoral indices compiled by NSE ended green with Nifty Auto leading the gains with a 1.87 percent rise.

Positive manufacturing PMI and monthly sales reports of automobile makers for May, also factored in the gains made by the indices. PMI showed that manufacturing activity in India grew at the fastest pace in three months in May, renewing hopes of improved economic activity in the county that hit an 8-month low in the month before.

Further, the Indian rupee was also trading at the day's high. The domestic currency appreciated as much as 0.6 percent to 69.29 against the US dollar.

The Reserve Bank of India's Monetary Policy Committee (MPC) is scheduled to announce its decision on Thursday, following the review. In the last two policy reviews, the central bank had cut the repo rate by 25 basis points each.

The MPC headed by RBI governor Shaktikanta Das will meet on Monday for a 3-day meeting. Experts predict another round of rate cut, a third consecutive one, to push economic growth, which fell to a five-year low in the last quarter of 2018-19, according to GDP data released on Friday.