Equity benchmarks darted up for the second session on the trot on Wednesday, mirroring a rebound in world stocks despite the looming threat of the Omicron variant.
A sustained recovery in the rupee, which advanced for the fifth straight day, further boosted sentiment, traders said.
The 30-share BSE Sensex rallied 611.55 points or 1.09 per cent to end at 56,930.56. Similarly, the broader NSE Nifty jumped 184.60 points or 1.10 per cent to 16,955.45.
Bajaj Finance was the top gainer in the Sensex pack, rising 2.94 per cent, followed by Bharti Airtel, Sun Pharma, Reliance Industries, SBI, L&T and Tata Steel.
Only three index components finished lower -- Wipro, ITC and Nestle India, dipping up to 0.77 per cent.
Domestic market is gaining ground amid a positive rebound in the global market. The rebound was broad-based while mid and small caps outperformed as the bargain opportunity led investors to accumulate the beaten-down stocks.
"The Omicron concerns and FIIs' selling may keep investors in a cautious mode. It is a time for selective stock picking with a focus on defensive and growth-oriented sectors rather than rushing to the market," said Vinod Nair, Head of Research at Geojit Financial Services.
Ajit Mishra, VP - Research, Religare Broking, too said participants should approach the market with caution at this point of time.
"Nifty may extend this rebound and the zone closer to 17,150 would now act as a hurdle. Importantly, the participation of the banking index is critical for any sustained move while other sectors are doing their bit. Amid all, the news related to the new COVID variant will remain on the market radar," he added.
All sectoral indices ended on a positive note, with BSE realty, industrials, energy, capital goods and auto indices climbing as much as 2.93 per cent.
Broader BSE midcap and smallcap indices jumped up to 1.66 per cent.
Global markets extended their rally despite surging Omicron cases in multiple countries and fresh border restrictions.
Elsewhere in Asia, bourses in Hong Kong, Tokyo and Seoul ended with gains, while Shanghai closed in the red.
Stock exchanges in Europe were also trading on a positive note in the afternoon session.
Meanwhile, international oil benchmark Brent crude rose 0.38 per cent to USD 74.24 per barrel.
The rupee appreciated by 5 paise to close at 75.54 against the US dollar.
Foreign institutional investors were net sellers in the capital market on Tuesday, as they offloaded shares worth Rs 1,209.82 crore, exchange data showed.