The Nifty ended the day higher by 34 points, while the Sensex ended the day higher by 109 points.
Nifty stocks that rallied were JP Associates, IDFC, DLF, Sesa Goa and Siemens.
Shares in PC jewellers rose on reports of the company replacing Orient Paper in S&P BSE 500 Index.
Realty stocks were leading the rally with HDIL higher by 13.1%, DLF Ltd up 4.7%. Oberoi Realty Ltd, Sobha Developers Ltd, Indiabulls Real Estate Ltd and Godrej Properties Ltd were up.
Meanwhile, markets in Asia ended the day with gains, while European markets were trading substantially higher. European stock markets rose to their highest since the 2008.
The German DAX, the French CAC and the UK's FTSE were all trading with gains.