The 30-share BSE index rose 533 points or 0.91 per cent to close at 59,299; while the broader NSE Nifty settled 159 points or 0.91 per cent higher at 17,691.
Top gainers in the sensex pack included NTPC, Bajaj Finserv, SBI, Bajaj Finance and Tech Mahindra with their shares rising as much as 4.08 per cent.
While Bajaj Auto, HUL, Nestle India, Kotak Bank and Titan were the major losers falling up to 0.78 per cent.
On the NSE platform, all sub-indices finished in green with Nifty Metal, Media, Realty and PSU Banks rising as much as 2.99 per cent.
The pharma index extended gains to the fifth session and hit a record high during the day, led by Divi’s Laboratories which surged 7.84 per cent.
NTPC gained over 4 per cent after the a news report said that the company expected to raise Rs 15,000 crore through IPO in 3 units including its renewables business, and the paring of a joint venture stake.
Investors now eye the September-quarter earnings season to start and a central bank rate decision due later in the week.
“We are seeing a relief rally, investors who were on the sidelines last week seem to be entering markets again,” Anand James, chief market strategist at Geojit Financial Services told news agency Reuters.
“Prior to the Reserve Bank of India’s (RBI) meeting and the start of earnings, we may see prices being pushed higher,” he added.
The RBI is likely to signal the start of an unwinding of its accommodative monetary policy at a meeting this week, economists at Standard Chartered Bank wrote in a research note on Friday.
Meanwhile, foreign institutional investors (FIIs) were net buyers in the capital market as they purchased shares worth Rs 131.39 crore on Friday, as per exchange data.
(With inputs from agencies)