Continuing its rebound, the benchmark BSE Sensex rallied over 738 points to trade at 23,740.03 and the NSE Nifty reclaimed the 7,200 points in late afternoon deals on across-the-board value-buying by participants amid hopes of a rate cut by the Reserve Bank.
Moreover, the strength in the rupee and positive Asian and European cues had a bearing on sentiment here, brokers said.
The 30-share index leaped 738.03 points, or 3.21 per cent, at 23,740.03 at 1430 hours in afternoon trade. It touched a high of 23,750.91.
The gauge had lost 152.30 points in yesterday's highly volatile session, mainly hit by a proposal for a higher dividend distribution tax on those earning more and a one on raising securities transaction tax on options trading.
Growth-oriented budgetary proposals like higher spending in infrastructure, allocation of nearly Rs 36,000 crore for the farm sector and a higher credit target aimed at doubling farmers' income in five years buoyed sentiment, brokers said.
The government's commitment to keep the deficit at 3.5 per cent of GDP in 2016-17, too lifted mood, they added.
The rupee strengthening by 47 paise to 67.95 against the American currency (intra-day) at the forex market did its bit.
The gains mostly came from FMCG, auto, IT, capital goods, banking, technology and realty, which rose by up to 4.87 per cent.
Also, the 50-share NSE Nifty recaptured the crucial 7,200-level by quoting higher by 223.70 points, or 3.19 per cent, at 7,210.75.
Among the 30-share Sensex constituents, ITC, Maruti Suzuki, Hero MotoCorp, ICICI Bank, Tata Motors, Adani Ports, TCS, L&T, GAIL and Wipro jumped by up to 9.87 per cent.
Hong Kong's Hang Seng index surged 1.55 per cent while Japan's Nikkei spurted 0.37 per cent. Europe was also in the positive terrain in early trade.
