The Sensex, which had lost 95 points in the previous session, bounced back to close with a gain of 137.26 points to close at 20,303.12. It touched the day's high of 20,452.30 as Reliance Industries (RIL) recorded handsome gains.
RIL shot up to cross Rs 1,100 level before ending with a gain of Rs 8.90 to RS 1,090.35.
The broad-based National Stock Exchange index Nifty rose by 39.75 points to 6,105.80. It had touched the day's high of 6,151.30.
A firming trend in the Asian region and higher opening in Europe further fuelled the upsurge.
Reports of rise in exports by 23.2 per cent in September on year-to-year, was another positive factor for the market.
Foreign investment into Indian stocks increased 68 per cent this year to a record, helping to drive the 15 per cent rally in the Sensex. In the 30-BSE index components, 23 stocks gained while other seven ended in negative zone.
Dr Reddy’s Lab, the second-biggest drugmaker by revenue, rose by Rs 21.40 to Rs 1,638.10 after second-quarter group profit jumped 32 per cent. Tata Motors, the biggest truckmaker and a index kitty stock, gained by Rs 32.30 to Rs 1,184.60 after the company said the Jaguar Land Rover unit is in talks with a possible partner in China.
Consumer durables, auto and metal sector stocks remained star performers on expectations of better revenue on rising their demand for the festival of Diwali.
The consumer durables sector index gained the most by 2.37 per cent to 6,460.53 as Hindustan Unilever, the biggest household products maker, rose by Rs 4.10 to Rs 305.65 ahead of its earnings today.
The auto sector index was second best performer, rising 1.23 per cent to 9,849.28, followed by metal index, 1.09 per cent to 17,208.75 as base-metal prices advanced in London to a 27-month high as investors sought to protect their wealth against a decline in the dollar.