The benchmark indices ended over 1.5 per cent higher on Thursday on the expiry of January-series futures and options (F&O) contracts.
The sharp rally was led by gains in information technology (IT), banking and fast-moving consumer goods (FMCG) stocks.
The S&P BSE Sensex ended at 36,256, up 665 points or 1.87 per cent, while the broader Nifty50 index settled at 10,831, up 179 points or 1.68 per cent.
In the broader markets, the S&P BSE MidCap ended at 14,560, up 61 points or 0.42 per cent, while S&P BSE SmallCap settled at 13,926, up 111 points or 0.80 per cent.
Among sectors, the Nifty Bank index rose 1.75 per cent led by Axis Bank, State Bank of India (SBI) and HDFC Bank. The Nifty IT index gained 1.60 per cent led by Infosys, Tata Consultancy Services (TCS) and Tech Mahindra.
Shares of Axis Bank rose 4.42 per cent to end at Rs 721.45 on the BSE, after private sector lender posted a healthy set of numbers for the quarter ended December 31 (Q3FY19). The stock surpassed its previous high of Rs 703 recorded on January 30, 2019, on BSE in the intra-day trade.
Shares of Dewan Housing Finance Corporation (DHFL) hit an over four-year low of Rs 139 apiece, down 14 per cent in the early morning trade on Thursday, on a media report that suggested that the ministry of corporate affairs will probe allegations against the housing finance company. The stock was trading at its lowest level since May 16, 2014.