Marketmen said the investor sentiment also got a fillip after bourses across the world recovered from recent losses. China's Shanghai index with a 1.92 per cent jump led the rally in Asia as investors bought shares available at low levels, analysts said.
European bourses also opened in the green, further bolstering the investor confidence, leading to a fag-end rush for financial and IT stocks.
The 30-share Sensex of the Bombay Stock Exchange finally ended the session at 17,614.48, up 173.04 points, or 0.99 per cent, to snap three days of straight losses. The National Stock Exchange's Nifty added 1.02 per cent to end at 5,289.05 points.
The key indices in China, Hong Kong, Singapore, Taiwan, Japan and South Korea rose in the range of 0.57 per cent to 1.92 per cent.
Buying was also sparked by usual high expectations that the first quarter earnings of India Inc would not disappoint the markets. The Q1 numbers would start trickling in from the second week of July 2010.
The progressing monsoon have intensified hopes of a bumper crop. The weather office said monsoon rains have advanced into the country's key grain-producing states of Punjab and Haryana and is forecast to progress further.
"Investors are feeling comfort on the progress of the monsoon, and a bumper harvesting is expected in the country. Firm world cues and hopes of robust first quarter performance lifted the market sentiment," Unicon Financial CEO Gajendra Nagpal said.
Hectic buying was witnessed on almost all the fronts and metal, consumer durables, banking and IT stocks were the major gainers.
Metal stocks gained following an overnight rise in metal prices on the London Metal Exchange and a recovery in the Chinese markets.
Jindal Steel was up 2.16 per cent, Tata Steel 1.77 per cent, Sterlite Ind 1.56 per cent and Hindalco 1.52 per cent.
IT stocks rose on bargain hunting after a recent slide triggered by weak US economic data. The US is the biggest market for Indian IT firms. IT bellwether Infosys moved up 1.59 per cent, TCS 2.45 per cent and Wipro 1.60 per cent.
Banking stocks rose for the second day with ICICI Bank jumping 2.12 per cent, SBI 1.78 per cent, HDFC Bank 2.41 per cent HDFC 0.13 per cent.
Auto major Mahindra & Mahindra, which jumped 2.67 per cent, was the top gainer in the Sensex pack.
However, Anil Ambani-led RCom extended yesterday's loss to end lower by 1.81 per cent, the most in the BSE-30.
While ACC lost 0.9 per cent, Jaiprakash Associates and Hero Honda dipped by 1.19 per cent and 0.47 per cent respectively.
Reliance Natural Resources Ltd (RNRL), which had tanked 27 per cent in the last trade, further slid by 1.30 per cent on its merger deal with group company R-Power, which ended 1.60 per cent lower.
Analysts said that RNRL plunged because company shareholders had inferred that the 1:4 share-swap deal was not sweet enough.
As per a decision that was taken on Sunday, RNRL shareholders would get one share of R-Power for every four shares they exchange.