Led by energy major Reliance Industries and ONGC, the Sensex closed 121.04 points up, or 0.63 per cent, to 19,444.84.
The broad-based National Stock Exchange index Nifty spurted by 38.25 points, or 0.65 per cent, to 5,908.35.
Brokers said energy majors like RIL, ONGC, Indian Oil and Bharat Petroleum remained on the fore-front following reports that the government might gradually increase the diesel price next year to cut subsidies.
They said the uptrend was further supported on a firming global trend as US lawmakers arranged talks with political parties before a budget deadline.
In 30-BSE index kitty stocks, 22 closed with gains while eight surrendered moderate ground led by banking sector on profit-booking from recent upsurge.
The oil and gas sector index gained the most by 2.38 per cent to 8,510.52 as segment major and index-heaviest Reliance Industries surged 2.73 per cent to Rs 840.35 and ONGC by 2.49 per cent to Rs 265.85.
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Among others, Oil India added 1.52 per cent to Rs 466.15, Indian Oil by 3.03 per cent to Rs 268.80, Hindustan Petroleum by 4.23 per cent to Rs 292.90 and Bharat Petroleum by 2.23 per cent to Rs 353.05.
The information technologies sector was second best performer by rising 1.21 per cent to 5,686.98, while banking sector index declined 0.01 per cent to 14,330.47 as investor booked profits from the recent surge.