Benchmark indices surged in trade, led by gains in Banking stocks.
Heavyweights, ICICI Bank and HDFC Bank pushed the indices higher, thanks to their high weightage in the index.
Shares in Yes Bank shed as much as 5.26 per cent, after the company denied reports of a share sale to Microsoft. The Sensex ended the day higher by 645 points, while the Nifty gained 187 points in trade.
Shares in IndiaBulls Real Estate were locked at the upper end of the circuit filter, after the board of the company decided to meet on Oct 11, to consider a buyback of shares.
JBM Auto gained ground after the company said that it has received order for buses. The stock was up more than 14 per cent in trade.
Shares in IndusInd Bank too gained ground ahead of the company's quarterly results to be declared later on Thursday. The stock was up more than 5 per cent in trade. Another private sector lender, RBL Bank did not have any such luck and the shares were down 1 per cent.
Zee Entertainment, which saw a spectacular rally on Monday lost around 2 per cent in trade on profit booking.
Most of the European markets were trading with gains, including the German DAX, French CAC and the UK's FTSE.