The benchmark Sensex soared by about 280 points in the opening trade after global markets staged a stellar rally following the bail out of troubled banking giant Citigroup by the US government.
The Bombay Stock Exchange barometer, which had closed flat on Monday, surged by 279.68 points, or 3.14 per cent, to 9,182.80 in the early trade with all sectoral indices trading in the positive zone.
The wide-based National Stock Exchange's Nifty rose by 82.45 points, or nearly 3 per cent, at 2,790.70 points.
Marketmen said that stellar gains in the Asian markets on Tuesday following the overnight rally in the US stocks after a government rescue of Citigroup bolster the sentiments in the domestic market.
Banking stocks registered gains up to five per cent as the bail out of Citigroup calmed fears of another financial turmoil, they added.
Shares of country's largest state-run lender SBI jumped by Rs 14.55, or 1.27 per cent, at Rs 1,161.85, ICICI Bank by Rs 14.50, or 4.50 per cent, at Rs 337.05 and HDFC Bank gained Rs 42.15, or 5.07 per cent, at Rs 873.70.
Other counters which supported the Sensex were Reliance Industries, BHEL, Larsen and Toubro, Infosys Technologies, Tata Consultancy, Wipro and Tata Power.
On Monday, the US Dow Jones Industrial Average closed higher by 4.93 per cent while London's FTSE gained 9.84 per cent.
Among Asian stock exchanges, Hong Kong's Hang Seng rose by 4.58 per cent, while Japan's Nikkei surged 4.25 per cent in early trade on Tuesday.