Market benchmark Sensex Tuesday surged by nearly 379 points to close at 36,442 on intense buying mainly in auto, financial and energy counters amid easing of geo-political tensions and positive macroeconomic outlook.
Similarly, the broader NSE Nifty rose nearly 124 points to settle just below the psychological 11,000 level.
Among the Sensex constituents, 23 stocks rose and seven counters declined. Tata Motors led the Sensex chart with a rise of 7.72 per cent, followed by Heromoto Corp 5.28 per cent and Axis bank 4.12 per cent.
The key BSE index was further lifted by ONGC, Coal India, Tata Steel, NTPC, Maruti and ICICI Bank -- rising as much as 3.96 per cent.
Among the major Sensex laggards, Infosys slips 1.15 per cent, HUL 0.62 per cent and TCS 0.19 per cent.
Meanwhile, the country's services sector activity gathered momentum in February, driven by a quicker expansion in new work orders that supported a faster increase in output and job creation, a monthly survey showed Tuesday.
The seasonally adjusted Nikkei India Services Business Activity Index rose from 52.2 in January to 52.5 in February, indicating an upturn in output. Indian bourses are seemed to have found some stability after a volatile week in which investors remained cautious due to fears that India and Pakistan could go to a war after the Indian Air Force targeted terror camps in the neighbouring country.
But investors now can heave a sigh of relief amid subsiding of skirmishes on the border between the two nations.
"Market extended the gains as optimism in pre-election rally after ease in geopolitical tension supported investors' sentiment. On the other hand, mid and small caps outperformed after one year of under-performance as investors' strategy has changed from sell on rally to buy on dips due to attractive valuations," Vinod Nair, Head of Research, Geojit Financial Services Ltd, said.
The Sensex started on a positive note at 36,141.07 in the morning and touched a high of 36,457.44 and low of 35,926.94 during the session.
Intra-day, the index saw a movement of over 530 points. It finally settled the day at 36,442.54, 378.73 points, or 1.05 per cent, higher.
The NSE Nifty opened at 10,864.85 and hit a high of 10,994.90 and low of 10,817.00 during the day. The index swung 177.9 points during the trading session. It closed at 10,987.45, showing a rise of 123.95 points, or 1.14 per cent.
In global markets, Asian indices ended on a mixed note, with China announcing that its growth rate for the year will be around 6 to 6.50 per cent, the slowest pace in 30 years. Over Night, US markets had ended lower after disappointing construction spending data.
Global investors remained edgy amid caution on the US-China trade talks front and concerns over slowing Chinese economy. China has slashed its official GDP target to 6 to 6.5 per cent this year as the world's second largest economy grapples with the ongoing trade war with the US and a continued economic slowdown.
Globally, investors tracked losses on Wall Street, where the global rally hit a bump as optimism that the world's top two economies are heading for a tariffs deal was replaced by a need for clarity on any agreement. In Asia, Shanghai, Hong Kong and Tokyo markets were lower.