The Sensex gained 2,476.26 points to close at 30,067.21 after resuming trading on Tuesday.
Following rise in equities, the market capitalisation of the BSE-listed firms zoomed Rs 7,71,377.02 crore to Rs 1,16,38,099.98 crore.
Equity markets were closed on Monday for 'Mahavir Jayanti'.
"The bears loosened their grip on the Indian markets on Tuesday as the indices clocked their biggest single-day gain in over a decade. Tracking the buoyant global cues as there are signs of COVID-19 plateauing in certain parts of the globe, the Nifty ended higher by 8.8 per cent at 8,792 points," Ajit Mishra, vice-president (research), Religare Broking Ltd, said.
Heavyweights Reliance Industries Ltd and HDFC Bank were the biggest contributor in the market rally, rising nearly 12 per cent and 10 per cent, respectively.
All Sensex components ended on a positive note where IndusInd Bank was the top gainer surging nearly 23 per cent, followed by Axis Bank, Mahindra and Mahindra and ICICI Bank.
The 30-share BSE barometer had plummeted 674.36 points or 2.39 per cent to close at 27,590.95 on Friday.
Markets rose on Tuesday, largely tracking recovery in global equities.
"Indian equities are significantly up today (on Tuesday), following positive cues from global markets, consecutive days of decline in intensity of COVID-19 cases and reports from the banking sector on healthy growth in advances as well as comfortable deposit position.
"However, this big up move is on a smaller base vis-à-vis where markets were around three months back," said Amar Ambani, senior president and head of research, YES Securities.
In the broader market, the BSE Midcap and Smallcap indices rose by 5.40 per cent and 4.13 per cent, respectively.
All the sectoral indices on the BSE also closed with gains led by bank, energy, telecom and healthcare indices. SUM HRS