The benchmark share indices ended over 1% higher on Monday, amid strong global cues, led by index heavyweight Reliance Industries and private banks.
The BSE Sensex advanced 215 points to close at 17,413 and the 50-share Nifty jumped 67 points to close at 5,282.
The Asian markets closed on a positive note on the back of solid US jobs data.
The Hang Seng closed higher by 332 points at 19,998, Nikkei jumped 172 points to 8,126 and the Taiwan closed higher by 69 points at 7,286 levels.
The European markets were trading firm even as investors grew cautious over the prospects of a bailout for Spain, with its 10-year bond yield holding close to 7% danger levels.
The CAC 40 index was up 16 points at 3,394, DAX was up 42 points at 6,908 and the FTSE 100 was up 5 points at 5,792.
Back home, Finance Minister, P Chidambaram addressed the media for the first time after assuming office of finance ministry.
He talked of returning to the path of high growth and emphasised that price stability is an important objective which needs to be achieved.
He also added that the ministry will shortly unveil path of fiscal consolidation.
Index heavyweight Reliance Industries continues to led the gainers chart on the Sensex.
It surged 5.7% to Rs 785, also its three-month high price on reports that the energy conglomerate has agreed to share its KG-D6 accounts with the government.
The agreement fulfills a key provision that contributed to a stand-off over government approvals Reliance needs to further develop the block, traders say.
The stock contributed 90 points to the Sensex in today's trade.
Sun Pharma ended up 1.7% after the company said its board will meet later this week to consider internal restructuring of the business and to announce first quarter results.
Tata Motors, GAIL India, HDFC Bank, BHEL, Tata Steel, Larsen & Toubro, Sterlite Industries, ICICI Bank, Maruti Suzuki, HDFC and Hero MotoCorp were also among the gainers.
On the other hand, Dr Reddy's Labs, TCS, Wipro, ITC, HUL, Tata Power, Bharti Airtel and Coal India were among the notable laggards from the heavyweight space.
Led by the gains in the Reliance Industries, the BSE oil & gas index was the top sectoral gainer. The index ended higher by 3% or 246 points at 8,352 levels.
Auto, bankex, capital goods, realty, metal, power and healthcare indices also advanced 0.6-1.7% each.
However, profit taking in defensive shares led to FMCG and IT indices ending lower in trades today.
Shares of the multinational companies, which would be probable delisting candidates, were in limelight on the bourses on reports that the market regulator Sebi said that it will not extend the deadline to comply with minimum public shareholding norms.
Wockhardt Limited surged over 4% to Rs 1,054, near its all-time high, after reporting a strong 94% year-on-year (yoy) growth in consolidated net profit at Rs 378 crore for the quarter ended June 2012 on back of higher income.
Net sales grew 35% at Rs 1,426 crore on year-on-year basis.
Reliance MediaWorks was locked in 20% upper circuit at Rs 66.30, after Anil Ambani promoted company announced restructuring of its business under two divisions -- film and media services and exhibition.
Orissa Mineral Development Company froze at its upper circuit of 5% at Rs 57,516, extending its past eight days rally on reports of stock split and bonus issue plans.
The broader markets also ended higher.
The BSE mid-cap index advanced 32 points to end at 6,105 and the small-cap index ended at 6,597, up 51 points.
The overall market breadth ended positive as 1,676 stocks advanced while 1,162 declined.