Expectations of good monsoon and hopes of passage of the Bankruptcy bill in the Rajya Sabha supported the rally.
Markets finished the session on a robust note on fresh buying by participants amid strength in the European equities.
A weak jobs data dampened prospects for a Federal Reserve interest-rate hike next month further boosting the sentiment.
Also, expectations of good monsoon and hopes of passage of the Bankruptcy bill in the Rajya Sabha supported the rally.
The S&P BSE Sensex surged 460 points to end at 25,689 and the Nifty50 zoomed 132 points to close at 7,866.
Financials contributed the most to the gains on the Sensex with ICICI Bank, HDFC, Axis Bank, HDFC Bank and SBI ending higher between 2%-3.5%.
ITC surged 2.6% after the company said there is "progressive resumption" of production at its cigarette factories, which was suspended from May 4 over the large pictorial warning issue.
"We hope that the Nifty will reach the 8,000 levels soon. There are several factors that justify this. First is the expectation of a good monsoon, with the second update on monsoon being due on May 15. Second is the advancement of the Bankruptcy Bill which has been moved to the Rajya Sabha, and there are hopes of the expectation of passage the bill. Third, is the good earnings posted by the Andhra Bank over the weekend despite of asset quality worries, which indicates that the asset quality worries are beyond us further aiding a spectacular rally among the larger PSU Banks. Lastly, the US jobs data released on Friday post market hours came below street expectation, signaling that the US Federal Reserve rate hike is not on cards,” points out AK Prabhakar, head-research, IDBI Capital.
The Asian stocks closed mixed with China stock losing steam after the latest data showed that China's exports and imports fell more than expected in April, underlining weak demand at home and abroad. The Shanghai Composite closed 2.8% lower%. However, Japan’s Nikkei and Hong Kong’s Hang Seng ended 0.6% higher.
Meanwhile, the nonfarm payrolls in the USA for the month of April rose by a seasonally adjusted 160,000 in April, the weakest gain since September and the unemployment rate held steady at 5% resulting in gains across the US benchmark indices.
Tracking gains in US, European equities surged today with CAC 40, FTSE 100 and DAX climbed between 0.2%-0.8%.
GAINERS & LOSERS
HUL posted net profit at Rs 1090 crore in January-March quarter, up 7.1% from Rs 1018 crore in corresponding quarter last fiscal.
However, volume growth of 4% (YoY) in the quarter was disappointing as the volume growth in the year-ago period was at 6%.
The stock emerged as the top loser of the day and shed 1%.
Meanwhile, domestic passenger car sales increased 1.87% to 1,62,566 units in April as against 1,59,588 units in the year-ago period.
Also, motorcycle sales rose by 16.24% to 10,24,926 units from 8,81,743 units a year earlier, according to data released by SIAM.
Among prominent gainers, Bajaj Auto, Hero Motocorp, Tata Motors, M&M and Maruti Suzuki ended higher between 1%-3.6%.
Thyrocare Technologies witnessed a stellar debut on the bourses, with the stock listing at Rs 665 -- a 49% premium compared with its issue price of Rs 446 per equity share, on the National Stock Exchange (NSE). The stock closed at Rs 618 up 39%.
Asian Paints gained 2% ahead of the march quarter results due tomorrow.
Another pack that hogged limelight was the shares of sugar companies trading higher up to 10% on the BSE on expectation of strong earnings for quarter ended March 31, 2016 (Q4FY16).
Upper Ganges Sugar & Industries , Andhra Sugars, Kakatiya Cement Sugar & Industries, Mawana Sugars, Parry Sugar Industries and Ugar Sugar Works closed higher up to 10%.
State run NTPC gained 2.6% after the company announced that it has raised Rs 1000 crore through private placement of secured non-convertible debentures.
Oil and Gas exploration majors ONGC, RIL and GAIL gained between 0.5%-1.5% after crude prices extended gains as raging wildfires hit production in Canada.
On the flip side, Claris Lifesciences dipped 4% after the company reported 60% year on year (YoY) decline in consolidated net profit of Rs 4 crore for the quarter ended March 31, 2016 (Q4FY16).
Among its peers, Dr Reddy’s Lab lost 1% while Sun Pharma and Cipla ended flat.