The 30-share index shot up by 225.27 points, or 0.88 per cent, to 25,744.51 with stocks of auto, realty, consumer durables, power and healthcare sectors leading the rally.
The gauge had gained 190.10 points in the previous session.
Similarly, the National Stock Exchange index Nifty edged higher by 65.50 points, or 0.85 per cent, to 7,691.45.
Brokers said besides easing of geopolitical tensions, robust quarterly earnings by Tata Motors and hopes of encouraging IIP numbers for June to be released later today buoyed trading sentiments.
Shares of Tata Motors rallied 8.18 per cent to Rs 484 in early trade on funds buying after the auto major yesterday reported over 3-fold jump in consolidated net profit at Rs 5,398.21 crore for the first quarter ended June 30.
Other auto stocks which also gained were Mahindra and Mahindra and Maruti.
Stocks of Coal India, GAIL India, HDFC Ltd, HDFC Bank, Larsen and Toubro, Reliance Industries and ONGC also strengthened, giving support to the benchmark Sensex.
Among other Asian markets, Japan's Nikkei rose 0.32 per cent while Hong Kong's Hang Seng shed 0.14 per cent in morning trade today.
The US Dow Jones Industrial Average ended 0.10 per cent higher in yesterday's trade on easing of geopolitical tensions.