The Sensex climbed 284 points while the Nifty finished above the 10,000-mark on Wednesday as risk-on sentiment remained in full gear amid supportive global cues.
Banking and finance counters saw heavy demand, helping the benchmarks close in the green for the sixth straight session.
After hitting a peak of 34,488.69, the 30-share BSE Sensex shed some gains in fag-end trade to finish at 34,109.54, up 284.01 points or 0.84 per cent.
Similarly, the NSE Nifty jumped 82.45 points or 0.83 per cent to end at 10,061.55. The index closed above the crucial 10,000-level for the first time since March 11, 2020.
M&M was the top gainer in the Sensex pack, spurting 4.82 per cent, followed by Kotak Bank, Bajaj Finance, SBI, Nestle India, ICICI Bank, ONGC and HDFC Bank.
On the other hand, NTPC, Bharti Airtel, Maruti and Hero MotoCorp were among the laggards, slipping up to 2.12 per cent.
Global markets soared to three-month highs as investors cheered the gradual reopening of economies the world over, even as the rising coronavirus cases and US-China tensions remained an overhang.
The domestic markets were also aided by robust foreign fund inflows, analysts said.
On a net basis, foreign portfolio investors bought equities worth Rs 7,498.29 crore on Tuesday, provisional exchange data showed.
"The buoyancy of the global markets triggered gap up opening and it traded range-bound thereafter. However, profit-taking in the last hour trimmed the gains. Amid all, Nifty reclaimed 10,000 mark and settled above the hurdle of 10,050 as well.
"Mixed trend was witnessed amongst the sectoral indices wherein sectors like metal, banking, and capital goods were the top gainers while sectors like IT and telecom ended in the red," said Ajit Mishra, VP - Research, Religare Broking Ltd.
BSE realty, bankex, finance, capital goods, oil and gas, industrials and consumer durables indices rallied up to 3.07 per cent, while telecom, power, teck and IT shed up to 0.95 per cent.
Broader BSE mid-cap and small-cap indices surged up to 1.24 per cent.
Meanwhile, India's service sector activities declined sharply in May as the coronavirus pandemic continued to impair business operations, restrict consumer footfall at shops and resulted in job losses, PMI data showed on Wednesday.
However, services sector activity in China recovered to pre-epidemic levels last month, buoying markets across Asia. Bourses in Shanghai, Hong Kong, Tokyo and Seoul closed up to 2 per cent higher.
Exchanges in Europe were also trading on a positive note in early deals.
International oil benchmark Brent crude futures climbed 1.04 per cent to USD 39.98 per barrel.
On the currency front, the rupee surrendered all intra-day gains to provisionally settle 11 paise lower at 75.47 against the US dollar.
India registered a record jump of 8,909 novel coronavirus cases, taking the tally to 2,07,615 on Wednesday, while the death toll rose to 5,815, the health ministry said.
