The benchmark Sensex on Monday jumped by close to 390 points in tune with global stocks on FIIs renewing buying activities after US Fed chief Ben Bernanke's remarks that economic recovery could be round the corner.
Extending its gains to the third straight day, the BSE 30-share barometer closed higher by 2.55 per cent or 387.92 points at 15,628.75.
Buying in bourses across the world was fuelled by Bernanke's comments last weekend that economic activity appears to be leveling out. He noted that the prospects for a return to growth path in the near term appear good.
His comments were greeted by investors around the world. Asian stocks gained in the range of 1-3 per cent and European indices are trading higher in the range of two per cent.
Foreign Institutional Investors were believed to be heavy buyers during the day. They had bought shares worth Rs 532.80 crore in equity on August 21 (the last trading day), as per the provisional data.
Marketmen said positive FII activity and expectations of a stability in India's industrial production and economic growth also boosted the sentiment.
Wider index Nifty on the National Stock Exchange also spurted by 114.00 points to close at 4,642.80.
On BSE, the rally was led by Tata Motors which gained a handsome 5.83 per cent. Besides the heavyweight stocks, small and mid cap counters also attracted buying. The small cap index and midcap index flared up by 182.89 points and 145.06 points respectively.