The 30-share Sensex resumed higher at 27,439.06 and rose to an all-time high of 27,581.68 in opening deals before quoting 27,668.31 points at 11:00 hours.
It showed a sharp gain of 321.98 points or, 1.17 percent, from its last close.
The CNX 50-share Nifty also hardened by 97.70 points, or 1.19 per cent, to hit 8,266.90.
Major gainers were HDFC (1.56 percent), ONGC (1.54 percent), Tata Steel (1.50 percent), Infosys (1.47 percent), SBIN (1.24 percent), Hero Honda (1.15 percent), TCS (1.12 percent), Wipro (1.06 percent), Coal India (1.04 percent) and Larsen (1.03 percent).
Foreign portfolio investors (FPIs) bought shares worth a net Rs 1,257.49 crore yesterday, as per provisional data.
In overseas markets, Asian stocks rose after US economic growth topped estimates and investors speculated that Japan's pension fund will boost equity holdings.
US stocks rallied yesterday as a report showed faster-than-estimated growth in gross domestic product,
fuelling speculation that the economy is strong enough to withstand higher interest rates.
Key benchmark indices in South Korea, Hong Kong, Taiwan, Singapore, Japan and China were up 0.11-1.68 percent.