The S&P BSE Sensex soared over 500 points on Monday, extending gains for the fourth consecutive session amid positive global cues.
The Sensex was up 564 points to close at 26,785 points, while the 50-share Nifty rose 168 points or 2.12%, to end at 8,119 points.
The rally in the markets is largely led by a surge in most of the Asian markets due to fading expectations over an interest rate hike by the US central bank this year.
Last week, an official data showed that the employment growth in the US remained weak in September, lessening the chances of monetary tightening by the US Federal Reserve in 2015.
"The incoming economic data have been a lot more mixed recently, with the awful performance of exports and manufacturing, both dragged down by the dollar's strength, now being compounded by a slowdown in employment growth," said Capital Economics in a note.
"Although consumption growth could easily top 4% annualised in the third quarter, overall GDP growth will be nearer 2.0% and the slump in employment growth will definitely rattle Fed officials. Accordingly, we expect it will be early 2016 before the Fed hikes," said the note.
Buoyed by the encouraging data, the top benchmark indices in Asia ended higher, with Japan's Nikkei and Hong Kong's Hang Seng gaining over 1.5%.
European markets also opened about 2% higher on the expectations that the US Fed would delay a rate hike following the disappointing jobs data.
Tata Motors shares, which have been under selling pressure in the past few months, went up sharply by 6.13% to end at Rs 315. A sharp move up in Tata Motors' stock prices was mainly led by a 61% jump in sales in its luxury car division Jaguar Land Rover (JLR) in the US.
"Tata Motors has seen a massive correction from its 52-week high in February 2015. The main reason was the slowdown in Chinese markets and JLR's steeper fall vis-à-vis the industry. While the slowdown is for real in China, we believe, JLR specific issues pronounced its fall. These issues will be resolved soon with launch of new models, right pricing of products, deeper penetration in Chinese market and ramping up of local production," said Amar Ambani, Head of Research, IIFL.
On the other hand, Maruti Suzuki shares fell nearly 4% to Rs 4,415 after a global brokerage Jefferies revised down its outlook for the stock to "underperform" from "buy".
Banking stocks were the top gainers, with HDFC Bank, ICICI Bank and Axis Bank ending higher in the range of 2% to 5% each.
Rupee continued its gains against the dollar for a fifth straight session, appreciating by 23 paise to 65.28 following strong gains in the domestic equity markets.
However, gold prices fell by Rs 210 to Rs 26,600 per 10 grams, while silver prices dropped by Rs 40 to Rs 35,760 per kg.