The benchmark Senses surged 580 points to end at one-month high of 35,011.65 on Friday. The 30-share Sensex got off to a strong start at 34,743.95 points and reclaimed the 35,000-mark to hit a high of 35,190.20 but profit-booking trimmed the gains. It finally settled 579.68 points, or 1.68 per cent, higher at 35,011.65.
This is its highest closing since October 4, when it had finished at 35,169.16.
The NSE Nifty leaped 172.55 points, or 1.66 per cent, to 10,553 after touching a high of 10,606.95 during the session.
On a weekly basis, both the Sensex and Nifty halted their two-week losing streak by surging 1,662.34 points or 5 per cent, and 523 points or 5 per cent, respectively.
Meanwhile, the rupee gained a massive 95 paise to trade at 72.50 per dollar (intra-day), which added to the momentum, brokers said.
Brent crude, the international benchmark, dropped below the USD 73-mark to quote at a seven-month low of USD 72.65 by falling 3.48 per cent on higher supply from the world's major producers.
Adding to the upbeat mood, GST collections in October crossed the Rs 1 lakh crore mark, after a five-month gap, on the back of festive spending and anti-evasion measures.
The Finance Ministry Thursday said 67.45 lakh businesses filed Goods and Services Tax (GST) returns in October and deposited Rs 1,00,710 crore as taxes.
Auto stocks were the centre of brisk activity during the session after some automakers came out with encouraging sales figures for October month.
Foreign institutional investors (FIIs), which had been selling on the Indian bourses, made fresh purchases worth Rs 348.75 crore Thursday, while domestic institutional investors (DIIs) sold shares to the tune of Rs 509.17 crore, provisional data showed.
"Expectation of global trade deal and cheer in domestic auto sales numbers supported the market to extend its rally. Any consensus in US-China trade negotiation could settle global market volatility and will attract investors to the beaten down stocks. Additionally, continued fall in oil prices and drop in yield eased liquidity concerns," said Vinod Nair, Head of Research, Geojit Financial Services.
Maruti Suzuki was the star performer in the Sensex pack, surging 6.37 per cent, followed by Tata Motors at 6.29 per cent.
Shares of Bajaj Auto rose 2.31 per cent after the company on Friday reported a 32 per cent jump in total sales at 5,06,699 units in October.
Other major gainers included Vedanta Ltd 6.04 per cent, IndusInd Bank 5.29 per cent, Adani Ports 4.46 per cent, M&M 3.87 per cent, Hero MotoCorp 3.62 per cent, HDFC Ltd 3.59 per cent, Bharti Airtel 3.30 per cent, Tata Steel 3.07 per cent and Yes Bank 2.77 per cent.
However, Wipro, TCS, SBI, Infosys and Sun Pharma ended lower by up to 3.29 per cent.
Shares of state-run oil marketing companies such as HPCL, BPCL and IOC gained up to 6.69 per cent, supported by falling crude prices in the global market.
Sector-wise, the BSE auto index emerged the best performer by climbing 4.05 per cent, followed by metal (3.04 per cent), oil and gas (2.46 per cent), consumer durables (1.85 per cent), FMCG (1.52 per cent), infrastructure (1.42 per cent), bankex (1.42 per cent), capital goods (1.30 per cent), PSU (1.07 per cent), power (0.79 per cent) and realty (0.12 per cent).
In contrast, IT, teck and healthcare indices ended in the negative zone, falling up to 1.32 per cent.
The broader markets too were in a better shape after investors widened their portfolios, lifting the BSE mid-cap and small-cap indices by up to 0.84 per cent.
The BSE and NSE will conduct a special 'Muhurat' trading session on Wednesday, November 7.
'Muhurat' trading, which is conducted on the auspicious occasion of Diwali, will be held between 1700 hrs and 1830 hrs, the stock exchanges said.
Elsewhere in Asia, Hong Kong's Hang Seng surged 4.21 per cent, Korea 3.53 per cent, Shanghai Composite Index 2.70 per cent, Japan's Nikkei 2.56 per cent and Taiwan index advanced 0.63 per cent.
European markets too were strong in their late morning deals. Frankfurt's DAX was up 1.29 per cent, while Paris CAC 40 rose 1.26 per cent. London's FTSE too climbed 0.75 per cent.