The Sensex resumed higher at 21,080.54 and rose further to 21,207.89 before quoting at 21,176.33 at 1030 hrs, showing a gain of 96.61 or 0.46 per cent from its last weekend's level.
The NSE 50-share Nifty also firmed up by 31.35 points or 0.50 per cent to 6,305.60 at 1030 hours.
The market sentiment was also boosted by data showing that foreign funds remained buyers of Indian stocks. Foreign institutional investors (FIIs) bought shares worth a net Rs 990.19 crore on last Friday, as per provisional data from the stock exchanges.
Asian stocks rose in early trade after data showed faster-than-estimated economic growth in the US and the International Monetary Fund said it's raising its outlook for the world's largest economy.
The key indices in China, Hong Kong, Taiwan, Singapore and South Korea rose 0.32 pct to 0.72 pct.
US stocks rallied on last Friday, lifting the Dow Jones Industrial Average and the S&P 500 to record levels, after a government report showed the economy grew at its fastest pace in two years last quarter.