Market built on its gains and scaled higher on buying pick-up, buoyed by manufacturing PMI for September that came in above the 50 mark for the ninth straight month signalling expansion.
The benchmark Sensex rallied 331 points led by realty, auto, energy and industrials.
The Nikkei Markit India Manufacturing Purchasing Managers' Index (PMI) -- a gauge of manufacturing performance -- settled at 52.1 in September, from 52.6 in August.
Firm Asian cues, coupled with optimism ahead of the RBI policy review tomorrow, made investor more nimble.
The 30-share index resumed higher and hovered in a range of 28,205.50 and 27,919.89. It was quoting at 28,197 at 1100 hours, showing a gain of 331.04 points, or 1.19 per cent, from its last close.
The NSE 50-share Nifty was also trading higher by 108.05 points, or 1.25 per cent, at 8,719.20.
Major gainers were Maruti, up by 3.79 per cent, followed by Hero MotoCorp 3.01 per cent, M&M 2.87 per cent, Adani Ports 2.78 per cent, Sun Pharma 2.26 per cent and Bajaj Auto 2.12 per cent.
Foreign portfolio investors (FPIs) sold shares worth a net Rs 1,028.31 crore last Friday, according to provisional data.
Overseas, Asian markets were mostly higher as investors weighed the prospects of a further US interest rate hike and a report on business sentiment from Japan.
US stocks closed sharply higher last Friday as Deutsche Bank shares rebounded amid a report that the German banking giant was near a settlement with the Justice Department.
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