The benchmark Sensex gained 289.83 points to reclaim 29,000 mark and Nifty jumped 94 points to end above 8,800 level on Friday on stellar SBI earnings, rising hopes of a pro-growth budget and positive global cues.
Logging their fourth successive session of gains, benchmark indices wrapped up the week in style after ending in the red for the preceding two weeks.
Shares of FMCG, healthcare, banking, auto and metal sectors were the major gainers of the day.
Country's largest public sector lender SBI on Friday reported over 30% jump in net profit December quarter. Its shares zoomed nearly 8%, adding about 86 points alone to Sensex's 289.83 point surge.
The BSE Sensex resumed higher at 28,888.99 and shot up further to 29,154.67 before ending at 29,094.93, showing a gain of 289.83 points or 1.01%.
Besides SBI, major contributors to the index's gain include TCS, ITC, M&M and ICIC Bank, HDFC and Sun Pharma. The Sensex has now gained 867.54 points, or 3.07%, in four days.
Similarly, the CNX 50-share Nifty rose by 93.95 points, or 1.08%, to close at 8,805.50.
"Supporting global cues, cease-fire in Ukraine and expectations of pro-growth budget, helped markets overcome the results of the Delhi assembly elections. Better-than-expected numbers from SBI, M&M also helped sentiments and so also the lower-than-expected CPI numbers," said Kotak Securities, Head-Private Client Group Research, Dipen Shah.
On the macro front, the rate of inflation based on the consumer price index (CPI) accelerated to 5.11% in January 2015 but was well within RBI's target while slowing IIP growth in December 2014 has made the case stronger for more monetary easing this year.
In the overseas markets, European stocks were trading higher, boosted by the signs that the Eurozone economy may be recovering and hopes that Greece is closer to an overhaul of its bailout.
Meanwhile, Foreign Portfolio Investors sold shares worth a net Rs 406.28 crore on Thursday as per provisional data while Domestic Institutional Investors bought shares worth a net Rs 705.53 crore.
Key indices in France, Germany and the UK rose by 0.48% to 0.57%.
Asian stocks also ended higher. Key indices in China, Hong Kong, Singapore, South Korea and Taiwan rose by 0.21% to 1.07% while Japan's Nikkei eased by 0.37%.
US stocks climbed on Thursday with major benchmarks nearing record highs, buoyed by a truce deal in Ukraine and strong quarterly earnings reports.
As many as 24 stocks out of the 30-share Sensex pack ended higher while only six finished lower.
In terms of gains, biggest Sensex winners were SBI (7.96%), M&M (5.11%), TCS (3.08%), Coal India (2.37%) and ITC (2.01%).
Wipro (1.99%), Sun Pharma (1.77%), Maruti Suzuki (1.74%), Hero MotoCorp (1.53%), ICICI Bank (1.33%) and HDFC (1.13%) also notched up good gains.
However, Gail India fell by 3.96%, BHEL by 3.12%, ONGC by 1.99% and HDFC Bank by 1.09%.
Among the sectoral indices, FMCG index rose by 1.77%, healthcare 1.56%, bankex 1.32%, auto 1.08% and metal 1.01%.
The total market breadth remained positive as 1,456 stocks ended in green, 1,429 finished in green while 98 ruled steady. The total turnover rose further to Rs 4,038.18 crore from 3,842.48 crore on Thursday.