Markets closed on a high on Tuesday after the Reserve Bank of India kept key policy rates unchanged and resolved to take a wait-and-watch stance during its second bi-monthly monetary policy review. Both Sensex and the Nifty hit seven-month highs after the review was announced.

The BSE benchmark Sensex, which rose to 27,082.63, ended up 232.22 points or 0.87% at 27,009.67 on Tuesday. The Nifty50 of the National Stock Exchange closed at 8,266, up 65.40 points or 0.8%, after rising to a high of 8,294.95 intraday.

In the forex market, the rupee was trading at 66.75 against the US dollar around mid-afternoon, up from its previous close of 66.98 a dollar.

The RBI's announcements were mostly in line with experts' predictions. The central bank pegged India's growth forecast at 7.6% for the current fiscal and kept the inflation target unchanged at 5% with an upward bias for January 2017.

Apart from the monetary policy review, the monsoon forecast by India Meteorological Department is also said to have a positive impact on the market. The Met predicted that southwest monsoon is "very likely" to hit Kerala on June 9.