The Sensex and the Nifty surged over 1.5 per cent at the closing session on Wednesday on heavy capital inflows led by IMF's forecast of better growth prospects for India in 2014.

In its World Economic Outlook, the IMF projected India’s GDP to grow at 5.4 per cent in 2014 and 6.4 per cent in 2015. It said “In India, real GDP growth is projected to strengthen, partly due to government efforts to revive investment growth.”

The 30-share BSE index Sensex was up 358.89 points or 1.61 per cent at 22,702.34 and the 50-share NSE index Nifty was up 101.15 points or 1.51 per cent at 6,796.20.

Barring IT and TECk, all other BSE sectoral indices ended in the green. Among them, banking, metal, healthcare and realty indices gained the most by 3.45 per cent, 2.26 per cent, 2.21 per cent and 1.85 per cent, respectively. On the other hand, IT index was down 1.09 per cent and TECk 0.84 per cent.

Sun Pharma, Axis Bank, Tata Motors, ICICI Bank and Hindalco were the top five Sensex gainers, while the top five losers were Infosys, ONGC, TCS, Wipro and Hero MotoCorp.

European and emerging market stocks rose as South Korea’s won strengthened to a 5 1/2-year high against the dollar.

Stoxx 50 was up 15.27 points or 0.48 per cent at 3,192.93, FTSE 100 rose 51.57 points or 0.78 per cent to 6,642.26, CAC 40 climbed 25 points or 0.56 per cent to 4,449.83 and DAX jumped 46.27 points or 0.49 per cent to 9.537.06.

Asian stocks excluding Japan rose on Wednesday tracking overnight cues from the Wall Street. Japanese stocks fell sharply after the yen surged on fading hopes of near-term stimulus from the Bank of Japan.

Nikkei 225 plunged 273 points or 1.87 per cent to 14,334, Hang Seng surged 208.97 points or 0.92 per cent to 22,805.94,ASX 200 jumped 54.67 points or 1.01 per cent to 5,465.30 and Shanghai was up 5.28 points or 0.25 per cent at 2,103.56.

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