The BSE Sensex closed the day at 17618 points, higher by 226 points, while the Nifty closed the day higher by 70 points.
Today's rally was sparked by European shares which were trading higher after the region's finance ministers helped ease Spain's debt worries. The UK's FTSE, the German DAX and the French CAC were all trading higher by 0.5% to 1.25%.
Domestically, shares of Axis Bank, Reliance Infrastructure, Jaiprakash Associates and Maruti Suzuki rose sharply. Shares of OnMobile Global which was battered in the last few trading sessions rose sharply following the resignation of its CEO. Varun Shipping too rose sharply following reports of a debt restructuring exercise.
Almost all of the Nifty stocks ended in the green apart from a few names like ACC, NTPC, Wipro and Tata Power. Markets are likely to take cues from the earnings season and inflation and WPI data which kicks off later this week.