Rising for the seventh straight day, the benchmark BSE Sensex today surged by 414 points to 27,730.21 on rally in realty, banks and auto shares as above average monsoon has reignited hopes of further easing of interest rates by the Reserve Bank.
In last seven days, the index has gained 1,359.23 points, its longest winning run since February.
Meanwhile, NSE Nifty reclaimed the crucial 8,300-mark.
Global cues were firm on reports that Greece has given its creditors new proposals on reforming bailout, fuelling hopes of averting a default and possible exit from the euro zone.
"A better-than-forecasted monsoon has reignited the optimism amongst market participants that a rate-cut by the RBI may be a possibility, if the monsoon trend sustains," said Hitesh Agrawal, Head Research of Reliance Securities.
Monsoon is expected to be normal in June IMD had said last week.
The 30-share BSE index resumed higher and remained in the positive terrain throughout the day. It hit an intra-day high of 27,782.31 before ending at 27,730.21, a steep rise of 414.04 points or 1.52 per cent -- its biggest single day gain since May 8 when it surged by 506.28.
The broader 50-issue NSE Nifty reclaimed 8,300-mark to hit a intra-day peak at 8,369.45 and settled at 8,353.10, showing a significant rise of 128.15 points or 1.56 per cent.
Top gainers among Sensex included Axis Bank, which surged 3.62 per cent and ICICI Bank zoomed 3.46 per cent.
"More-than-average monsoon showers are giving hopes to the investors for an interest rate cut by RBI. Banks were the key drivers for the sharp rise of the index tough all the sectoral indices ended in the green," said Gaurav Jain, Director of Hem Securities.
Globally, Asian markets closed higher while European markets were higher in their afternoon trade.
Key indices in France, Germany and the UK were up in the range 1.30 to 3.20 per cent.
Asian shares also ended in the green, with Japan, Hong Kong, Taiwan, Singapore and South Korea up between 0.40 to 1.26 per cent. The Chinese stock market was shut today.
Back home, foreign investors sold shares worth Rs 106.12 crore on Friday while domestic investors bought shares worth Rs 447.55 crore.
"Price-sensitive stocks and blue-chips gained on value-buying and short-covering. Indices added over one and half percent during the day with the help of gain in regional markets and also the expectation of a rate cut by the central bank..." said Pramit Brahmbhatt, Veracity Group CEO.
Out of 30-share Sensex, 25 ended higher. Major gainers were Axis Bank 3.62 per cent, ICICI bank 3.46 per cent, Infosys 2.77 per cent, HDFC 2.50 per cent, SBI 2.19 per cent, TCS 2.11 per cent, BHEL 2.07 per cent, Tata Steel 1.84 per cent, HDFC Bank 1.77 per cent, ITC 1.69 per cent, Tata Motors 1.67 per cent, HUL 1.63 per cent, GAIL 1.61 per cent and CIL 1.45 per cent.
Among BSE sectoral indices realty rose 5.05 per cent, followed by bankex 2.62 per cent, consumer durable 2.42 per cent, IT 1.86 per cent, power 1.67 per cent, FMCG 1.39 per cent, teck 1.39 per cent and metal 1.13 per cent.
Small-cap and mid-cap indices rose by 1.40 per cent and 1.49 per cent, respectively on good retail buying.
The market breadth was strong as 1,748 stocks ended in the green, 954 fell and 114 ruled steady. Total turnover fell to Rs 2,324.97 crore from Rs 3,542.85 crore on Friday.