Power, capital goods, PSUs, banking, consumer durables, healthcare, metals, auto and IT led the rally on expectations of strong reforms in these sectors in the next week's Budget.
After a higher start, the 30-share BSE index rallied to to touch intra-day high of 25,460.96 before settling at nearly two-week high of 25,413.78, clocking a rise of 313.86 points, or 1.25 percent. Of 30 Sensex scrips, 24 scrips rose. The gauge had gained 37.25 points on Friday.
For the quarter ended June 30, the Sensex rose 3,027.51 points or 13.5 percent on the back of robust inflows as the BJP government stormed to power at the Centre after polls. The BSE index gained about 1,196 points in June month.
Brokers said besides easing global crude oil prices as fears of supply disruption from Iraq receded, expectations that the reform measures in the next week's Union Budget will boost the country's economic growth, bolstered sentiments.
"Volatility and profit booking is visible ahead of upcoming Budget for 2014-15," said Rakesh Goyal,Senior Vice President,Bonanza Portfolio.
The 50-share Nifty of the National Stock Exchange reclaimed the crucial 7,600 mark by rising 102.55 points, or 1.37 percent, to close at 7,611.35. It touched a high of 7,623.65 and a low of 7,531.60.
Global oil prices eased on softer US demand, traders say.
US benchmark West Texas Intermediate for August delivery fell 26 cents to USD 105.48 and Brent crude eased 22 cents to USD 113.08 per barrel.
Stocks of state-run oil companies saw good activity. BPCL climbed 5 percent, HPCL gained 4.7 percent, IOC was up 3.7 percent and GAIL rose 1.4 percent. The ONGC counter finished over 3 percent higher. Stocks of power and capital goods were among top gainers.
Buying in small-cap and mid-cap shares among investors helped prop up the market, brokers said.


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