After a weak start, the 30-share index gained 110.69 points, or 0.53 percent, to settle at 20,811.44 points, a level last seen on January 24.
Brokers said market remained bullish since last week after the government announced several measures to contain fiscal deficit and highlighted diminishing price pressures in its interim budgetary proposals.
The current rally was backed by banking and capital goods sectors on expectations that improving economic growth might boost the corporate earnings, they said.
The broad-based National Stock Exchange index Nifty rose by 30.65 points, or 0.50 percent, to 6,186.10, after touching an intra-day low of 6,130.80.
Engineering major Larsen & Toubro rose by 2.85 percent after its subsidiary L&T Infrastructure Development Projects secured FIPB approval for FDI worth Rs 1,000 crore. Power equipment maker BHEL too jumped 3.95 percent on increased investment buying.
Among banking stocks, Axis Bank rose by 3.96 percent, ICICI Bank by 0.91 percent and HDFC Bank by 1.44 percent, pushing the banking index up by 1.19 percent to 12,192.66.
In 30 Sensex stocks, 22 closed with gains. Tata Power was the top performer on the benchmark surging by 5.02 percent after power regulator CERC allowed it to raise tariff and as well as seek compensation of around Rs 330 crore.

Outside the index, ICRA shot up 19.41 percent to Rs 1,913 after Moody’s made an offer to raise its stake in the credit-ratings agency. In global markets, Asian stocks lost ground while Europen market opened weak.


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