JOIN USThe Bombay Stock Exchange's 30-share bellwether ended the session at 17,651.73, up by 180.70 points or 1.03 per cent.
The International Monetary Fund raised the growth forecast for the Indian economy on robust corporate earnings, among other things.
The National Stock Exchange's wide-based Nifty-50 closed 1.06 per cent higher, at 5,296.85 points.
Taking cues from an overnight rally in the US market, the Sensex opened on a strong note and never looked back. During the trade, it touched a high of 17,728.37.
Analysts said that investment confidence on Dalal Street was high after the International Monetary Fund raised India's growth forecast for the current year to 9.5 per cent, stating that favourable financing conditions and robust corporate performance would accelerate economic expansion.
The lender has upped the growth projection from 8.8 per cent, estimated in April.
"The market sentiment was boosted after the IMF raised hopes of a better-than-expected global economic outlook," Ashika Stock Brokers research head Paras Bothra said.
"Reports that the US retail sales grew at its fastest pace in four years helped the Asian space move up," he added.
Besides this, the Washington-based body said that the world economy would grow faster than expected this year, pushing global bourses northward.
Hectic buying was seen across the front and all sectoral indices on the BSE ended in the green with gains up to 2 per cent. Consumer durables, realty, IT, metal and banking stocks were the major gainers.
IT major Infosys, which will kick off the first quarter earning of India Inc next week, jumped 1.61 per cent. While TCS rose by 1.70 per cent, Wipro edged up by 0.63 per cent.
Metal stocks bounced back today, with Sterlite Industries surging by 3.55 per cent, the highest in the BSE-30. Tata Steel rose 1.96 per cent and Hindalco 2.08 per cent.
Easing food inflation also pushed market confidence, brokers said. Annual food inflation eased to 12.63 per cent for the week ended June 26.
Reliance Industries Ltd, which holds the maximum weight in the Sensex, ended 0.34 per cent higher at Rs 1,056.50.
ICICI Bank rose 1.89 per cent, SBI 2.29 per cent, HDFC 1 per cent and HDFC Bank 0.34 per cent.
In the Sensex pack, 24 scrips settled with gain, while six ended in the red.
Among the losers, ACC fell by 0.99 per cent, the lowest in the BSE-30, NTPC by 0.57 per cent and HUL by 0.51 per cent.
On the global front, all Asian bourses except China ended in the green. Europe was also firm in the mid-session.