All-round buying ahead of the expiry of the futures and options contract on coming Thursday coupled with persistent foreign capital inflows pushed up the BSE benchmark Sensex by 222 points in the late morning trade.
The market sentiment was also boosted after credit rating agency Moody's said that the outlook on its Baa3 rating for India is stable.
Shares of banking, realty, consumer durable, FMCG and refinery firmed up sharply on strong buying enquiries.
The BSE benchmark Sensex resumed higher at 18,615.55 and shot up further to a high of 18,767.12 before quoting at 18,759.26 at 1030 hrs, showing a net gain of 222.25 points or 1.20 per cent from its last close.
The NSE 50-share Nifty also rose by 64.70 points or 1.15 per cent to 5,700.60 at 1030 hrs.
Major gainers from the Sensex pack were HDFC (2.60 per cent), HDFC Bank (2.57 per cent), Bajaj Auto (1.79 per cent), Jindal Steel (1.62 per cent) and Sterlite Ind (1.57 per cent).
FIIs bought shares worth a net Rs 163.14 crore yesterday as per provisional data from the stock exchanges.
Most Asian stocks gained in the early trade after Greece's creditors reached a deal to release the next tranche of aid tothe debt-struck country.
Key benchmark indices in Hong Kong, Japan, Singapore and South Korea rose by between 0.12 per cent and 0.9 per cent while Key indices in China and Taiwan fell by between 0.02 per cent to 0.95 per cent.