In a rare split decision, the BoJ's board voted 5-4 to accelerate purchases of Japanese government bonds so that its holdings increase at an annual pace of 80 trillion yen ($725 billion), up by 30 trillion yen.
BoJ's easing is being seen as an alternative to the U.S. Federal Reserve's just concluded bond-buying programme, supporting the rally in emerging markets such as India, already underpinned by reforms and hopes of a rate cut.
"BOJ's easing would further the argument of central bankers other then Fed providing stimulus to support economies and assets," said U.R. Bhat, managing director at Dalton Capital, a unit of U.K.-based investment management firm Dalton Strategic Partnership LLP that manages nearly $2 billion in assets.
"I agree there are strong expectations of a rate cut. But there is no tax on expectations. Is it?"
Foreign portfolio investors have bought shares worth $13.45 billion and $22.44 billion in debt in Asia's third-largest economy so far this year.
India ended fuel price controls, raised gas prices, proposed opening up of the coal sector and relaxed rules for foreign investment in construction, earlier in October.
The Sensex rose as much as 2 percent to an all-time high of 27,894.32, before ending up 1.9 percent at 27,865.83.
The Nifty gained as much as 1.98 percent to mark a record high of 8,330.75, and finished 1.87 percent higher at 8,322.20. Both indexes surpassed their previous record highs hit on Thursday.
October also marked an eighth month of gains in nine for the indexes, mainly helped by optimism tied to the election of Narendra Modi as Prime Minister and thereafter by a 24 percent slump in crude oil price since June.
The Nifty rose 4.5 percent, while the Sensex advanced 3.64 percent in October.
Shares also marked their biggest weekly gains since June. The BSE rose 3.8 percent, while NSE gained 3.84 percent.
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