The Sensex opened at 17,911 and surged above the 18K mark on buying in select stocks and positive cues from Asian markets. Nifty too regained the 5,400 level in early trades.
Banking stocks helped the BSE benchmark index to touch a high of 18,104 in noon trades. Banking stocks gained as heavyweight, ICICI Bank jumped on strong quarterly numbers.
The Sensex finally ended at 17,868 - up 213 points.
Nifty ended up 64 points at 5,432.
Asian markets surged on strong corporate earnings and shrugged off news that Chinese manufacturing shrank in July amid investor hopes that the world's fastest growing major economy will expand strongly. Hang Seng jumped 1.8% to 21,418. Taiwan Weighted gained 2% at 7,912.
BSE bankex jumped 2.5% to 11,816 led by ICICI Bank. The bank rose 4% to Rs 939 on posting a 5% rise in Q1 net profit at Rs 1,091 crore.
Other banking stocks Bank of India and Punjab National Bank surged 7% and 5%, respectively. SBI added 3.7% to Rs 2,598.
Yes Bank, Bank Of Baroda, Union Bank and Canara Bank were among the other big gainers in the sector.
"Clearly, the growth is picking up, with provisions down on a quarter-on-quarter basis, which is the biggest positive for the bank. For SBI, I feel that there could be some possibility of asset quality surprises on the downside", said Suresh Ganapathy, Analyst (Banking sector), Macquarie Capital Securities.
The BSE consumer durables, metal and FMCG index also rallied over 1% each. The FMCG index jumped to its all time high of 3,270 today as ITC, HUL, Ruchi Soya and Godrej Consumer Products gained. ITC and Hindustan Unilever were up around 1% each at Rs 313 and Rs 254, respectively.
Bharti Airtel jumped 3.6% to Rs 318. ONGC rallied 2.7% to Rs 1,277.
Metal stocks were in the green. Sterlite and Hindalco surged 2.5% each to Rs 180 and Rs 164, respectively. Tata Steel added 1.8% to Rs 547.
HDFC, Maruti Suzuki, Larsen & Toubro and Reliance Infrastructure also advanced in trades.
Market heavyweight, Reliance, added 0.5% to Rs 1,015.
Fertiliser stocks jumped on reports that the empowered group of ministers headed by Pranab Mukherjee has decided to allocate natural gas from the Reliance gas field in order to meet the gap in fertilizer production.
Fertilizers and Chemicals Travancore jumped 4% to Rs 52. Tata Chemicals surged 5% to Rs 353. National Fertilizers and Radico Khaitan were up marginally in trades.
However an analyst from a lading brokerage firm said, " The long term beneficiaries are limited as fertilizer industry is capex intensive. It is too early to get excited about allocation of gas to fertilizer companies".
BSE market breadth was positive. Out of 3,049 stocks traded, 1,761 advanced while 1,153 declined.