The Sensex ended at 25,881, a gain of 576 points, or 2.27 percent. The NSE Nifty ended 186 points, or 2.40 percent, at 7,934.90. Tech Mahindra closed with a gain of 10.29 percent at Rs. 528.55.
Indian stocks rallied on Wednesday, tracking a spurt in Asian equities that rose on the upbeat new U.S. home sales data for April.
The S&P BSE Sensex was trading at 25,717 at around 12.45 p.m., a gain of 403 points, while the NSE Nifty was up 134 points at 7,882.
Bank stocks such as ICICI Bank, State Bank of India and Axis Bank were leading the Sensex rally while the top gainers on the broader, 50-scrip Nifty were Tech Mahindra, ICICI Bank, IndusInd Bank and Ambuja Cement.
The biggest gainer on the BSE was the information technology services company, Tech Mahindra, whose shares had rallied 8.24 percent and trading at Rs. 518.75.
The company had reported upbeat fourth quarter results on Tuesday after market hours. Net profit rose almost 100 percent to Rs. 897 crore from Rs. 472 crore in the corresponding quarter in 2014-15. Revenues were up 12.5 percent to Rs. 6,884 crore on a sequential basis.
The Mumbai-based entity also said it has abandoned plans to set up payments bank, joining the ranks of IDFC Bank, Telenor Financial Services and Sun Pharma promoter Dilip Shangvi and Cholamandalam Investment and Finance.
Among sectoral indices, the BSE Bankex was up 2.54 percent and the BSE IT was trading with a gain of close to 2 percent.
On the NSE, the Nifty Bank was the biggest gainer at 2.44 percent, followed by Nifty IT and Nifty Auto.
Purchases of new homes in the U.S. surged in April to the highest level since the start of 2008, pointing to a robust spring selling season for builders, IFA Global said in a note on Wednesday, citing data from the U.S. commerce department.
The Indian rupee opened at 67.63 to the US dollar on Wednesday after closing the previous day at 67.75 levels.