Besides, a firming trend at other Asian markets also influenced trading sentiments, brokers said.
The 30-share index regained the 28,000-level by zooming 692.61 points, or 2.53 per cent, to quote at 28,039.43, a level last seen on December 9. The gauge had shed 238.45 points in the previous two sessions.
All the sectoral indices, led by realty, banking and auto, were trading in positive zone with gains up to 6.74 percent. On similar lines, the 50-share NSE Nifty went up by a whopping 206.10 points, or 2.48 per cent, to 8,483.65.
Brokers said sentiments bolstered by the RBI's surprise move to cut repo rate by 0.25 per cent to 7.75 percent with a view to boost economic growth.
Besides, better-than-expected quarterly earnings by some blue-chip companies and a better trend at other Asian bourses boosted sentiments.
Prominent gainers among the 30 Sensex stocks were HDFC Ltd, ICICI Bank, SBI, M&M, Tata Power, Axis Bank, L&T, Maruti Suzuki, RIL, ITC Ltd, Tata Motors, HDFC Bank, TCS, Bajaj Auto, Wipro Hero MotoCorp, NTPC, BHEL, Bharti Airtel and Infosys lifing the key indices sharply higher.
Meanwhile, the total market valuation of all BSE-listed firms today regained the Rs 100-trillion mark as the benchmark Sensex climbed over 692 points after the RBI surprisingly cut interest rate by 25 basis points.
Measured in terms of total market capitalisation of all listed companies on the country's biggest bourse BSE, the overall investor wealth in the Indian stock market rose to Rs 1,00,07,341 crore on Thursday.