Sustained capital inflows from foreign funds also boosted the market sentiment. FIIs bought shares worth net Rs 863.77 crore last Friday, as per the provisional data from stock exchanges.
The BSE Sensex opened higher at 21,416.67 and shot up further to an all-time peak of 21,483.74 before quoting at 21,376.57 at 1030 hrs, showing a sharp gain of 380.04 points, or 1.81 per cent, from its last weekend's level.
The 50-share Nifty hit a lifetime high of 6,415.25 before quoting at 6,373.95 at 1030 hrs, showing a gain of 114.05, or 1.82 per cent.
Major gainers were ICICI Bank (5.11 per cent), Larsen & Toubro (3.83 per cent), Oil & Natural Gas Corpn (3.39 per cent), HDFC Bank (3.33 per cent), SSTL (2.96 per cent), Tata Power Company (2.61 per cent), State Bank of India (2.27 per cent) and Bharti Airtel (2.33 per cent).
Asian stocks climbed in early trade on better than estimated data on US jobs and Chinese exports.
Key benchmark indices in Taiwan, South Korea, Singapore, Japan and Hong Kong rose between 0.02 and 1.84 per cent.
However, China's Shanghai Composite fell 0.09 per cent.