The Reserve Bank of India's Monetary Policy Committee, headed by Governor Shaktikanta Das, is due to release its sixth bi-monthly statement after conclusion of a three-day meeting.
Economists, analysts and investors will monitor the policy statement and the central bank commentary closely for any signs of policy easing.
While some economists expect the RBI to shift its stance to neutral from the current calibrated tightening, others say the possibility of a surprise rate cut on February 7 itself cannot be ruled out.Today's statement from the central bank will mark the first under Governor Shaktikanta Das, who took office nearly a week after the last policy meet on December 5 by his predecessor Urjit Patel.Consumer inflation - which the central bank monitors primarily to formulate its policy - stood at 2.19% in December.
That marked the slowest pace of inflation based onCPI or Consumer Price Indexrecorded since June 2017.
The MPC is expected to be cautious on the inflationary impact of the budget even as fiscal slippage seems manageable, said Kotak in a note on February 5.
"The MPC might raise concern on the quality of expenditure, especially when the borrowings (government and public enterprises) have increased significantly.
However, the MPC decision will hinge solely on the expected benign inflation trajectory," Kotak noted.Market breadth favoured the gains, with 959 stocks on the NSE trading higher agaisnt 604 laggards.
On the BSE, 994 scrips advanced versus 585 that declined.
The Nifty Auto - comprising automobile stocks - rose as much as1.3 per cent.
Other prominent gainers from the sector includedTVS Motor, Mahindra Mahindra and Tata Motors DVR.
Top advancers on the 50-scrip index at the time were Bajaj Auto, Sun Pharma, Tata Motors, Yes Bank and Eicher Motors, trading between 1.5 per cent and 2.5 per cent higher.The Sensex jumped as much as 170 to touch 37,145 in early trade while the Nifty peeked above the 11,100 mark.
At 9:43 am, the Sensex traded 127 - or about 0.4 per cent - higher at 37,103 and the Nifty was at 11,092, up 30 points from the previous close.
However, the brokerage also acknowledged the possibility of the MPC deciding to tread cautiously and pushing a rate cut to the April policy review.
"The RBI's commentary on core inflation and interim budget should be closely watched," it noted.Brokerage Edelweiss said in a note on Wednesday that it expects a softer stance from the MPC "with a good chance of a rate cut as well with soft headline inflation, slowing growth momentum and peaking of global rates".Domestic stock markets have extended their rally to five days in a row.
On Wednesday, the Sensex surged 358points to close at 36,975and the Nifty logged its highest closing level in over four months.
(Read more:Markets extend rally to fifth straight day) Today, the SGX Nifty on the Singapore Exchange - an early indicator of the NSE Nifty in India - was last seen trading24 points - or about 0.2 per cent - lower at11,081.