Brokers said investors increased positions ahead of the expiry of the December derivatives contracts tomorrow, while foreign capital inflows continued to rush in.
After resuming higher at 19,302.47, the Bombay Stock Exchange (BSE) 30-share index jumped to 19,468.40 as buying picked up in ICICI Bank, Bharti Airtel and Jindal Steel.
Among sops for exporters declared today, the government announced extension of 2 per cent interest subsidy till March 2014 and a pilot scheme of 2 per cent interest subsidy for project exports through Exim Bank.
Capital goods major L&T closed 2.19 per cent higher.
Helped by these positive sentiments, the Sensex closed at 19,417.46, a rise of 162.37 points or 0.84 per cent. This is its best single-day gain since 169 point-rise on November 30.
"Short covering was also witnessed ahead of Futures and Options (F&O) expiry day tomorrow, said Rakesh Goyal, Senior Vice President, Bonanza Portfolio."
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Similarly, the NSE 50-share Nifty firmed up by 49.85 points or 85 per cent to 5,905.60.
Dealers said banks stocks, including SBI and HDFC Bank, gained on hopes the Reserve Bank of India (RBI) will pump funds to ease the liquidity situation. On December 28, RBI will push Rs 8,000 crore in the market by buying government securities.
Oil&gas shares including Reliance Industries and ONGC also inched up, helping the benchmark indices cement gains.
Power-related scrips, including Tata Power, Bhel and NTPC, gained around 0.5-1.5 per cent range on good buying. MORE)