Nifty ended the day's trade at 24,774.30, up by 390 points.
Despite a significant fall last month, the market began this week's rally, as well as the beginning of the proceedings in August, on a positive note.
The sentiment remained positive amid declining crude oil prices and easing of tensions in the Middle East.
At the end of the day, Sensex remained 544.39 points or 0.70 percent at 78,639.03, and the Nifty was up 390.70 points or 1.60 percent at 24,774.30.
The top gainers, among the Nifty50 stocks, are InterGlobe Aviation, TCS, Infosys, Shriram Finance, and Grasim Industries.
The top losers remained Sun Pharma, Apollo Hospitals, Maruti Suzuki, ONGC, and Tech Mahindra.
Rising more than 3 percent, the Nifty IT index led the gains.
Meanwhile, the Indian rupee ended on a strong note 95.34 per dollar compared to previous close of 95.39.