Rising for the fourth straight session, the 30-share BSE Sensex settled 997.46 points or 3.05 per cent higher at 33,717.62.
Similarly, the NSE Nifty soared 306.55 points, or 3.21 per cent, to 9,859.90.
Global markets shrugged off US GDP contraction data after American pharma firm Gilead's remdesivir drug showed promising results in treating COVID-19 patients.
Further, a strengthening rupee and rising buzz of another stimulus package by the government, focussed on industries, kept domestic investor sentiment positive, traders said.
ONGC was the top gainer in the Sensex pack, rallying 13.40 per cent, followed by HCL Tech, Hero MotoCorp, TCS, Maruti and Infosys.
Shares of Reliance Industries and Tech Mahindra climbed around 3 per cent ahead of their earnings announcements, while HUL settled in the red.
Sun Pharma, IndusInd Bank and Asian Paints too closed with losses of up to 2.72 per cent.
During the holiday-shortened week, Sensex rallied 2390.40 points or 7.63 per cent, while Nifty Surged 705.50 points or 7.70 per cent.
Domestic financial markets will remain closed on Friday for 'Maharashtra Day'.
"The NSE Nifty 50 has posted its best monthly gain since April 2009, registering gains of over 14 per cent. Buying was seen among huge volumes on weekly F&O expiry day with old economy stocks (including auto, oil & gas, metals) advancing well accompanied by IT stocks.
"Asian markets rose on Thursday, carried by optimism overnight on Wall Street that a new drug could help to treat COVID-19," said Deepak Jasani, Head Of Research, HDFC Securities.
BSE metal index zoomed 8.27 per cent, followed by auto, IT, teck, oil and gas, basic materials, telecom and energy.
On the other hand, healthcare and FMCG indices ended in the red.
Broader BSE midcap and smallcap indices advanced up to 1.46 per cent.
On the global front, US GDP shrank 4.8 per cent in Q1 amid the coronavirus crisis, while Chinese factory activity expanded for the second straight month in April as the country resumed work after the lockdown.
Top US epidemiologist Anthony Fauci said that Gilead Science's remdesivir "has a clear-cut, significant, positive effect in diminishing the time to recovery".
Bourses in Shanghai and Tokyo ended with significant gains, while those in Hong Kong and Seoul were closed for a holiday.
However, stock indices in Europe were trading on a tepid note in early deals after data showed the euro zone economy contracted 3.8 per cent in the first quarter.
International oil benchmark Brent crude futures rallied 9 per cent to USD 26.40 per barrel.
The rupee surged 57 paise to provisionally close at 75.09 against the US dollar.
Meanwhile, global tally of coronavirus infections climbed to 31.93 lakh, with around 2.27 lakh deaths.
The death toll due to COVID-19 in India rose to 1,074 and the number of cases climbed to 33,050, according to the union health ministry. ANS ABM ANS ABMABM