The BSE Sensex advanced 215 points to close at 17,413 and the 50-share Nifty jumped 67 points to close at 5,282.
The Asian markets closed on a positive note on the back of solid US jobs data.
The Hang Seng closed higher by 332 points at 19,998, Nikkei jumped 172 points to 8,126 and the Taiwan closed higher by 69 points at 7,286 levels.
The European markets were trading firm even as investors grew cautious over the prospects of a bailout for Spain, with its 10-year bond yield holding close to 7% danger levels.
The CAC 40 index was up 16 points at 3,394, DAX was up 42 points at 6,908 and the FTSE 100 was up 5 points at 5,792.
Back home, Finance Minister, P Chidambaram addressed the media for the first time after assuming office of finance ministry.
He talked of returning to the path of high growth and emphasised that price stability is an important objective which needs to be achieved.
He also added that the ministry will shortly unveil path of fiscal consolidation.
Index heavyweight Reliance Industries continues to led the gainers chart on the Sensex.
It surged 5.7% to Rs 785, also its three-month high price on reports that the energy conglomerate has agreed to share its KG-D6 accounts with the government.
The agreement fulfills a key provision that contributed to a stand-off over government approvals Reliance needs to further develop the block, traders say.
The stock contributed 90 points to the Sensex in today's trade.
Sun Pharma ended up 1.7% after the company said its board will meet later this week to consider internal restructuring of the business and to announce
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