Markets have extended gains in late noon trades on continued buying in the realty, banking and metal space.
The Sensex after opening with a positive gap on the back of strong global cues, moved upwards and touched a high of 17,157.
It ended near that level at 17,051 - up 189 points. Nifty ended up 60 points at 5,124.
Global stocks jumped on bargain hunting after the recent steep decline.
Nikkei gained 2% to 8,763 on short covering after three consecutive days of losses.
Jakarta and Taiwan markets soared 2.4% each. In Europe too, CAC has surged 2% to 3,029. DAX gained 2.4% to 5,319.
Going forward, the markets may take cues from the US President Barrack Obama's speech to the Congress, due on Thursday, highlighting ways to boost hiring.
Federal Reserve chairman Ben Bernanke is scheduled to discuss the nation's economic outlook on the same day, in Minnesota.
Buying by the Foreign Institutional Investors has also gained some traction lately. They were net buyers of Rs 432 crore in cash, while the Domestic Institutional Investors were net sellers of Rs 415 crore.
Markets are in a risk-aversion mode, but valuations are attractive pricing in all domestic fundamental worries, a Credit Suisse report says.
It further adds, a pause in the tightening stance is imminent if there is further deterioration in the global growth outlook. Interest rate-sensitive stocks will therefore outperform markets over a 612 month time frame.
In other news, the proposed Land Acquisition Bill is likely to sharply inflate business costs for companies from the mining, metal and infrastructure sectors, a report by investment banking and institutional brokerage firm Religare Capital has said.
The Bill was cleared by Cabinet earlier this week and was scheduled to be introduced in Parliament today.
Market heavyweight, Reliance, continued to shine after BP Plc said it is confident of of raising natural gas production from its eastern offshore KG-D6 block in two years time.
The stock was the biggest contributor the Sensex's upmove and added 1.2% at Rs 831.
J P Associates jumped 7.6% to Rs 71 on news reports that the company is in talks with Votorantim, Cemex for a minority stake sale.
The company is exploring the option of roping in a strategic partner for its cement business. It is in talks with South America conglomerates such as Cemex and Votorantim Group, who have a global presence.
Coal India, HDFC Bank, Tata Power and Jindal Steel also advanced over 3% each.
Among other stocks, Educomp Solutions gained 3.5% to Rs 224 after it received a Rs 60.72 crore order from the Chhattisgarh government for implementation of ICT solutions across 582 government high schools and higher secondary institutes.
Meanwhile, some weakness was witnessed in IT, FMCG and auto stocks with ITC, HUL, M&M, Bajaj Auto and Infosys down marginally in trades.
Auto stocks dropped as data showed that passenger vehicle sales, which include cars, vans and sport utility vehicles, fell 5.7% in August, the second drop in two and a half years.
BSE market breadth was positive. Out of 2,960 stocks traded, 1,823 stocks advanced while 1,004 stocks declined on the BSE.
