The Sensex surged past the 21,800 points, while the Nifty crossed the 6500 mark with ease. ICICI Bank surged more than 7 per cent, while State Bank of India gained 5 per cent and Larsen and Toubro gained 6 per cent.
The high beta real estate names also saw buying interest with DLF, HDIL and Unitech on the buying list.
The Bank Nifty was up more than four per cent in trade with large scale shorts being covered. Union Bank, Canara Bank and Syndicate Bank were some of the other PSU banks that gained in trade.
The IT and pharma pockets were very weak in trade. Tata Consultancy Services and Infosys fell more than 2 per cent, as investors shunned defensives in favour of cyclicals.
Investors also abandoned pharma stocks with Ranbaxy, Cipla and Dr Reddy's among the top losers in trade.
Investors also sold into other defensive names from the FMCG pack including ITC and Hindustan Unilever.