The S&P BSE benchmark sensex jumped by 414 points to close at 27,730.21 on all-round buying in view of progress in monoon coupled with rally in European stocks and sharp gains in US index futures.
Shares of Realty, Bankng, Consumer Durable, IT, Power, FMCG and Auto sectors were the major gainers of the day.
Stocks rose across the globe on reports that Greece has presented a new plan to stave off default before an emergency summit on the country's debt crisis.
Above-average monsoon rains during the initial part of the June season boosed the market.
The sensex resumed higher at 27,427.19 and shot up further to 27,782.31 before ending at 27,730.21, showing a sharp gain of 414.04 points or 1.52 per cent.
The CNX 50-share Nifty also rose by 128.15 points or 1.56 per cent to finish at 8,353.10.
In overseas stock markets, European stocks rallied as investors grew optimistic over Greek debt negotiations. Asian markets edged higher on reports that Greece has presented a new plan to stave off default before an emergency summit on the country's debt crisis.
Key indices in France, Germany and UK were up 1.30 pct to 3.20 pct.
Asian markets ended higher on reports that Greece has presented a new plan to stave off default before an emergency summit on the country's debt crisis. Key indices in Japan, Hong Kong, Taiwan, Singapore and South Korea were up 0.40 to 1.26 pct. The Chinese stock market was shut for a holiday.
Trading in US index futures also indicated that the Dow could jump 160.50 points at the opening bell today.
Meanwhile, Foreign portfolio investors (FPIs) sold shares worth a net Rs 106.12 crores on last Friday as per provisional data released by the stock exchanges while domestic institutional investors (DIIs) bought shares worth a net Rs 447.55 crore.
Stocks may remain volatile this week ahead of the expiry of futures and options (F&O) June contract on coming Thursday.
Mr. Pramit Brahmbhatt, Veracity Group CEO said," Today also local equities looked positive. Price sensitive stocks & blue chips gained on value-buying and short-covering.
Indices added over one and half percent during the day with the help of gain in regional markets and also the expectation of a rate cut by the central bank raised on the hopes of monsoon which improved the sentiments in the market".
25 scrips out of the 30-share sensex pack ended higher while only five finished lower.
Major gainers were Axis Bank 3.62 pct, Icici bank 3.46 pct, Infosys 2.77 pct, HDFC 2.50 pct, SBI 2.19 pct, TCS 2.11 pct, BHEL 2.07 pct, Tata Steel 1.84 pct, HDFC Bank 1.77 pct, ITC 1.69 pct, Tata Motors 1.67 pct, HUL 1.63 pct, Gail 1.61 pct and Coal India 1.45 pct.
Among the S&P BSE sectoral indices Realty rose by 5.05 pct followed by Bankex 2.62 pct, Consumer Durable 2.42 pct, IT 1.86 pct, Power 1.67 pct, FMCG 1.39 pct Teck 1.39 pct, Metal 1.13 pct and Auto 1.00 pct.
Small-cap and Mid-cap indices also rose by 1.40 pct and 1.49 pct respectively on good buying from retail investors.
The market breadth was strong as 1,748 stocks ended in the green, 954 closed in the red and 114 ruled steady. Total turnover fell to Rs 2,324.97 crs from Rs 3,542.85 crs on last Friday.