The 30-share index ended the day at 26,524, up 121.59 points, while broad-based 50-share index quoted 8,127, up 33.15 points at close.Hopes India will see above-average south-west monsoon rains after two years of drought have bolstered optimism about the domestic economy, helping offset some of the global volatility tied to Britain's vote to leave the European Union last week.
Stronger rains, besides benefiting the key rural sector, could also cool down food prices, raising the prospect that the Reserve Bank of India would be more willing to cut interest rates again later this year.
"The monsoon is progressing well, and that is something which is more positive for us," told Neeraj Dewan, director at Quantum Securities Pvt to Reuters.
"People are now waiting to see how things span out and progress in the UK to react further based on that news."
Lupin was the top performer on both the benchmark indices and gained over 6 per cent.
Shares of ITC were up 2.59 per cent, after hitting their highest since February 2015 earlier in the session, while Hindustan Unilever rose 3.25 per cent.
Both stocks, which were among the top gainers on the Nifty50, accounted for nearly half of the gains on the index.
Tata Communications gained as much as 7.99 per cent after the company said it would sell its South-African fixed-line unit Neotel to Liquid Telecom Group.
Idea Cellular rose 4.78 per cent to its highest in over two weeks, after the company management reiterated confidence in its execution strategy and ability to gain market share, in an analyst meet on Monday.
Among the top losers, software services companies extended falls due to their hefty exposure to Europe.
Tata Consultancy Services fell 0.84 per cent, after declining 6.44 per cent in the previous three sessions. Infosys was down 0.50 per cent, while HCL Technologies fell 1.75 per cent.
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