In addition, rupee stabilising against the US dollar also buoyed the trading sentiment.
The 30-share barometer resumed higher by 169.46 points at 16,100.36.
It further shot up to 16,315.44 before quoting at 16,304.15 at 1145 hours, showing a significant rise of 263.05, or 1.77 per cent, from its last close.
All the sectoral indices led by auto, banking and metal, were trading in positive with gains of up to 2.65 per cent.
The NSE 50-share NIfty also firmed up by 86.00 points, or 1.77 per cent, to 4,949.30, after rising to 4,953.70 points.
Major gainers were Reliance Industries (1.02 per cent), Sterlite Ind (2.83 per cent), Hero MotoCorp (4.11 per cent), DLF (1.80 per cent), Hindustan Unilver (2.05 per cent), NTPC (1.77 per cent), Jindal Steel (3.81 per cent) and ITC (3.06 per cent).
Brokers said besides recovery in the rupee, a firming trend on the Asian boures after finance ministers and central bank governors from the world's leading economies pledged to give support to Europe's financial crisis, buoyed the trading sentiments.
Meanwhile, the rupee recovered by 16 paise to 55.48 against the dollar at Forex market at 1130 hours.
In the Asian region, key benchmark indices in China, Hong Kong, Japan, Taiwan and Singapore rose between 0.27 per cent and 1.81 per cent.