The 30-share index shot up by 225.27 points, or 0.88 percent, to 25,744.51 with stocks of auto, realty, consumer durables, power and healthcare sectors leading the rally.
The gauge had gained 190.10 points in the previous session.
Similarly, the National Stock Exchange index Nifty edged higher by 65.50 points, or 0.85 percent, to 7,691.45.
Brokers said besides easing of geopolitical tensions, robust quarterly earnings by Tata Motors and hopes of encouraging IIP numbers for June to be released later on Tuesday buoyed trading sentiments.
Shares of Tata Motors rallied 8.18 percent to Rs 484 in the morning trade on funds buying after the auto major yesterday reported over 3-fold jump in consolidated net profit at Rs 5,398.21 crore for the first quarter ended June 30.
Other auto stocks which also gained were Mahindra and Mahindra and Maruti.
Stocks of Coal India, GAIL India, HDFC Ltd, HDFC Bank, Larsen and Toubro, Reliance Industries and ONGC also strengthened, giving support to the benchmark Sensex.
Among other Asian markets, Japan's Nikkei rose 0.32 percent while Hong Kong's Hang Seng shed 0.14 percent in the morning trade on Tuesday.
US Dow Jones Industrial Average ended 0.10 percent higher in Monday's trade on easing of geopolitical tensions.

Latest News  from Business News Desk