However, the optimism surrounding blue-chip stocks was tempered by the fact that industrial production and retail inflation data are due later this week.
The Sensex opened strong at 33,317.72 and touched a high of 33,535.97. It could not go far and settled at 33,455.79, up 205.49 points, or 0.62 per cent.
This is its highest closing since November 29 when it had closed at 33,602.76.
It had risen 653.12 points in the previous two sessions.
A strengthening rupee too supported the rally.
"Jobs data's cheer for US markets helped Indian markets, especially the pharma and IT stocks, to start the week on a positive note. Gains were measured though, with a deluge of macro numbers scheduled of release this week," said Anand James, Chief Market Strategist, Geojit Financial Services Ltd.
Global shares had a field day. Positive leads from other Asian markets tracking record at Wall Street following forecast-beating US jobs data came as the trigger. Investors eyed Federal Reserve's policy meeting later this week, too.
M&M made the most of the positive vibes among Sensex components, up 2.16 per cent, followed by Lupin 2.15 per cent.
Maruti Suzuki had a stellar run, hit an all-time high, but settled 1.11 per cent higher in the end.
Also on the buy list were HDFC, Wipro, Coal India, SBI, ITC, Bharti Airtel, Sun Pharma and Dr Reddy's.
The IT index was the cynosure of all eyes as it climbed 1 per cent. Technology, healthcare and auto too whetted investor interest.
Both mid and small cap indices recorded gains up to 0.36 per cent.
Unitech surged 10.56 per cent after the NCLT authorised the government to appoint 10 nominees on the board of the realty firm.
Domestic institutional investors (DIIs) were the major movers as they picked up shares worth Rs 1,243 crore while foreign funds continued with their selling momentum, offloading equities net Rs 675.16 crore on Friday, provisional data showed.