The BSE IT sector, however, failed to snap a three-day losing streak and closed around 0.14 per cent lower.
Indian shares closed in green after three days, mirroring a firm global rally as a weak US data reduced the odds of the Federal Reserve raising rates this year, propelling the BSE Sensex again to the 27,000-level.
Spurt in auto stocks gave a further fillip to the market mood with the sector index logging a gain of 2.33 per cent.
The benchmark BSE Sensex resumed higher at 26,842.19 and firmed up further to 27,037.95 before closing at 27,010.14, showing a gain of 230.48 points or 0.86 per cent.
Tata Motors was the top index gainer with a surge of 8.06 per cent as its Jaguar Land Rover unit reported a 3 per cent rise in September sales.
Other automakers including Maruti Suzuki, Hero MotoCorp and Bajaj Auto also notched up smart gains on hopes of a surge in sales during the festive season.
Meanwhile, the US Commerce Department reporting that retail sales inched up by 0.1 per cent in September triggered a massive rally in Asian and European markets as the data reinforced hopes of a Fed rate hike delay.
"India is experiencing a benefit from the same with strong uptick in Asia and EMs," said Vinod Nair Head-Fundamental Research of Geojit BNP Paribas Financial Services.
As a result, the 50-share NSE Nifty also perked up by 71.60 points or 0.88 per cent to close at 8,179.50.
The BSE IT sector, however, failed to snap a three-day losing streak and closed around 0.14 per cent lower. All the other sectoral indexes ended in green.
The 30-share Sensex lost 300 points in last three days on disappointing second quarter earnings numbers of technology companies including TCS and Infosys.
The bearish mood turned for the better today on buying in auto, refinery, metal, capital goods and power sector stocks.
Major BSE gainers included BHEL 3.02 per cent, Tata Steel 2.94 per cent, GAIL 2.16 per cent, Coal India 2.14 per cent, ONGC 2.04 per cent, SBI 1.92 per cent and Lupin 1.84 per cent.
However, M&M, Wipro, Hindalco, Hind Unilever, Cipla, NTPC, TCS and Infosys ended up to 0.86 per cent lower.
Chinese stocks led gains in Asian markets amid fresh signs of reform for their state-owned firms. Indices like China, Hong Kong, Japan, Singapore, South Korea and Taiwan rose in the range 0.93 per cent to 2.32 per cent.
European stocks were also higher as expectations build that the Federal Reserve will delay raising interest rates. Key indices like France, Germany and the UK firmed up between 0.96 per cent to 1.37 per cent.
"Markets edged up higher as expectations build that the US Federal Reserve will delay raising interest rates soon after disappointing US economic data and that the Fed's delay in raising interest rates will slow capital flight from emerging markets," said Gaurav Jain Director of Hem Securities.
Out of the 30-share Sensex pack, 21 scrips ended higher. Among the BSE sectoral indices, auto rose by 2.33 per cent followed by oil&gas 1.51 per cent, metal 1.40 per cent, capital goods 1.92 per cent, power 1.18 per cent, bankex 0.89 per cent, realty 0.89 per cent and FMCG 0.52 per cent.
Broader markets too performed better with the BSE the mid-cap index rising 0.79 per cent and the small-cap gaining 0.48 per cent.
The market breadth continued to remain positive as 1,534 stocks ended in green, 1,191 fell while 147 ruled steady. The total turnover fell to Rs 2,851.62 crore (Rs 28.51 billion) from Rs 3,293.22 crore (Rs 32.93 billion) on Wednesday.
