The benchmark Sensex jumped by 542 points in early trade on Tuesday on massive buying by funds as well as retail investors, following a strong rally in global markets.
The 30-share index, which had gained 781.24 points on Monday, shot up by another 542.06 points, or 4.79 per cent, at 11,851.15 in the first five minutes of trading on Tuesday.
The wide-based National Stock Exchange's Nifty rose by 157.55 points, or 4.51 per cent, at 3,648.25.
Stock brokers said sentiments were bolstered on expectations that the government might take more steps to restore investors' confidence.
They said overnight gains of up to 40 per cent in Indian companies ADRs values at the US markets also buoyed the trading sentiments here.
Asian markets opened on a strong note today with Japanese shares gaining as much as 13 per cent on hopes that new measures announced by governments worldwide will ease the global credit crisis.
Wall Street staged its biggest rally in 75 years with the Dow Jones Industrial Average skyrocketing by 936.42 points, or 11.08 per cent last night.
On the domestic front, banking stocks continued to remain front-runners on the bourses, giving major support to the Sensex.
ICICI Bank surged by 6.96 per cent at Rs 454.70, while largest state-run State Bank of India stocks rose by 3.60 per cent at Rs 1,555.85.
Other gainers were Reliance Industries, Reliance Infra, Rcom, HDFC Bank, Larsen and Toubro, BHEL, Infosys Technologies, Wipro Ltd, Tata Consultancy Services and Satyam Computers.