The Sensex rose by 215.31 points, or 1.09 per cent, to 19,888.95, a level last seen on January 31. The index had gained 98 points in the previous session. The gauge had touched the day's high of 19,917.88.
Similarly, the National Stock Exchange index, Nifty regained 6,000 points level by rising 72.50 points, or 1.21 per cent, to close at 6,043.55.
MCX-SX index SX40 rose 90.92 points, or 0.78 per cent, to close at 11,731.20 points.
Brokers said the buying activity gathered momentum, tracking a strong rally in global markets on the back of lower borrowing costs after Reserve Bank of Australia cut its benchmark interest rate, lifting bluechips further higher.
Besides, expectations of an encouraging IIP data for March to be released later this week, too generated buying activity, they said.
"Broad based buying was seen and index heavyweights like Reliance, ITC, HDFC Bank and Axis Bank aided the index to move upwards. European markets were also in positive terrain," said Nidhi Saraswat, Senior Research Analyst, Bonanza Portfolio Ltd.
The stock of HUL remained centre of brisk activity by surging 1.09 per cent to Rs 579.55, Jubilant Food by 1.18 per cent to Rs 1,136.70, while a well-diversified ITC Ltd gained 2.73 per cent to Rs 335.20.
In 30-BSE index-components, 25 stocks climbed, while five closed with losses.
The FMCG sector gained the most by 2.00 per cent to 6,657.58 points and banking index was the second best performer by adding 1.80 per cent to 14,436.99 as stocks of State Bank of India, Yes Bank, ICICI Bank, HDFC Bank, Axis Bank and Bank of Baroda Indusind Bank recorded smart gains.
The interest-sensitive realty sector index rose 1.40 per cent to 1,933.35, while auto sector index gained 1.12 per cent to 11,105.38 followed by capital goods by 0.90 per cent to 10,045.08, healthcare index by 0.88 per cent to 8,875.41.