Besides, a firming overseas trend boosted trading sentiments here as soft US jobs related data cemented hopes that the Federal Reserve would not again trim its economic stimulus anytime soon, traders said.
After losing 93 points last week, stocks were off to a flying start and the BSE Sensex consolidated gains as the day progressed to end higher by 375.72 points, or 1.81 per cent, at 21,134.21. This is the best gain since 387.69-point rise on November 25, 2013.
Infosys, TCS and RIL led 21 Sensex gainers higher while Sun Pharma, HUL and Tata Power were among the nine losers.
Brokers said investors bet that RBI Governor Raghuram Rajan will keep interest rates unchanged at the policy review on January 28, helping the benchmark reclaim 21,000-level for the first time since January 1, 2014.
Also Read
The 50-share NSE Nifty rose 101.30 points, or 1.64 per cent, to end at to 6,272.75. Intra-day, it hit high of 6,288.20. Also, SX40 index of MCX-SX gained 187.24 points to close at 12,610.58.
"Stock specific buying was prominent keeping the trend upwards. Positive global cues boosted the sentiment," said Nidhi Saraswat, Senior Research Analyst, Bonanza Portfolio.
The BSE IT index, which rose 2.92 per cent, was the biggest gainers among sectoral indices as Infosys and TCS galloped more than three per cent each.
The Oil & Gas index was among the top three sectoral gainers after shares of ONGC rose for the third straight session and ended 2.94 per cent higher after government notified pricing guidelines, while RIL spurted 2.58 per cent.
Banking, capital goods and auto also saw heavy buying.