A day ahead of the Reserve Bank of India's second bi-monthly monetary review for fiscal 2014-15, a benchmark index of Indian equities markets closed trade 242.32 points or 0.95 percent up.
The rally was led by consumer durables, automobile, capital goods, information technology (IT) and metal sectors.
The 30-scrip Sensitive Index (Sensex) of the S&P Bombay Stock Exchange (BSE), which opened at 25,631.68 points, closed trade at 25,723.16 points, up 242.32 points or 0.95 percent from the previous day's close at 25,480.84 points.
The Sensex touched a high of 25,754.42 points and a low of 25,531.38 points in the trade so far.
To control inflationary pressures, the apex bank is likely to keep key interest rates unchanged.
RBI Governor Raghuram Rajan is known for according primacy to controlling inflation. Food inflation remaining over eight percent may be weighing heavily on his mind, say analysts.
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In the day's trade, S&P BSE consumer durables index surged by 264.63 points, automobile index gained by 228.63 points, capital goods index increased by 226.11 points, IT index was up 199.51 points and metal index moved up by 185.27 points.
However, healthcare index lost 12.44 points.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) too made healthy gains. It closed 81.05 points or 1.07 percent up at 7,683.65 points.
The major Sensex gainers were: Infosys, up 3.66 percent at Rs.3,462.60; Hindalco Inds, up 3.12 percent at Rs.190.25; Sesa Sterlite, up 2.44 percent at Rs.289.65; Wipro, up 2.42 percent at Rs.548.80; and Maruti Suzuki, up 2.40 percent at Rs.2,649.10.
The losers were: Sun Pharma, down 0.98 percent at Rs.761.35; HDFC, down 0.81 percent at Rs.1,031; Bharti Airtel, down 0.71 percent at Rs.376.85; Cipla, down 0.35 percent at Rs.440.95; and HDFC Bank, down 0.26 percent at Rs.813.15.
Among the Asian markets, Japan's Nikkei fell 0.31 percent, while China's Shanghai Composite Index was 1.74 percent up. Hong Kong's Heng Seng moved 0.28 percent higher.
In Europe, London's FTSE 100 was up 0.49 percent, Germany's DAX Index gained 0.05 percent and France's CAC 40 was 0.77 percent higher.