The benchmark BSE Sensex Monday soared 479 points to settle at 27,490.59 on across-the-board buying led by auto, realty and refinery stocks, as investors took fresh positions after persistent selling in April.
Moreover, the 50-share NSE Nifty rose by 150 points to recapture the 8,300-level.
Across-the-board buying at the beginning of May series, rallies in refinery stocks and the passing of Finance Bill, 2015 boosted sentiments, brokers said.
Meanwhile, the BSE market capitalisation regained Rs 100 lakh crore-level, helped by robust gains in stocks like ONGC, RIL and Infosys.
Amid persistent taxation concerns faced by foreign investors, the indices had near four-month low in last trading session on Thursday.
Finance Minister Arun Jaitley in Parliament on Thursday clarified that minimum alternate tax (MAT) will not apply to capital gains on the sale of securities, royalty, technical service fees and interest income.
Brokers also attributed Monday's rebound to value-buying from an "over-sold" position after persistent fall in stock prices in the April series as participants snapped recently beaten down blue-chip stocks.
The Sensex resumed higher at 27,204.63 and shot up further to a high of 27,537.85 before ending at 27,490.59, registering a rise of 479.28 points or 1.77%.
The 50-share NSE Nifty recaptured the 8,300-level to hit a high of 8,346.00 points, before settling 150.45 points or 1.84% higher at 8,331.95. This is the best single-day gain in two months for the index.
Overseas, European stocks were trading higher after latest data showed that euro zone's manufacturing sector expanded in April. Key indices in France and Germany rose in the range 0.39 to 0.84%, while the UK market was closed Monday.
Meanwhile, Foreign portfolio investors sold shares worth Rs 3,157.61 crore and Domestic institutional investors bought shares worth Rs 2,460.80 crore on Thursday as per provisional data.