Benchmark BSE Sensex rose by over 379 points on Tuesday as gains in oil & gas, banking and auto shares helped the barometer continue winning run for the third straight session.
The 30-share BSE benchmark index advanced 379.43 points or 0.64 per cent to settle at 59,842.21.
During the day, it jumped 460.25 points or 0.77 per cent to 59,923.03.
The broader NSE Nifty climbed 127.10 points or 0.72 per cent to 17,825.25 as 42 of its constituents advanced.
Easing inflation concerns after the wholesale price-based inflation slowed down to a five-month low of 13.93 per cent in July and buying in index majors Reliance Industries and HDFC twins added to the momentum.
"The easing of inflationary pressures has encouraged domestic investors to remain optimistic about the pace of economic recovery. Better-than-expected CPI numbers, aided by slower increase in food and fuel prices, may limit the pace of rate hikes by the RBI," said Vinod Nair, Head of Research at Geojit Financial Services.
From the Sensex pack, Mahindra & Mahindra, Maruti, Asian Paints, Hindustan Unilever, UltraTech Cement, HDFC and HDFC Bank were the lead gainers.
On the other hand, State Bank of India, Bharti Airtel, Bajaj Finance, Tata Consultancy Services and NTPC were the laggards.
In Asia, Seoul and Shanghai ended higher, while Tokyo and Hong Kong settled lower.
Equities in Europe were trading higher in mid-session deals.
Markets on the Wall Street had ended higher on Monday.
Stock markets were closed on Monday on account of Independence Day.
Meanwhile, the international oil benchmark Brent crude dipped 0.86 per cent to $94.28 per barrel.
Foreign institutional investors (FIIs) were net buyers in the Indian capital market as they purchased shares worth Rs 3,040.46 crore on Friday, according to exchange data.