The 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE), which opened at 19,373.23 points, closed at 19,521.25 points, up 116.15 points or 0.6 percent from its previous close at 19,405.1 points.
It had touched an intra-day high of 19,610.46 points. At the National Stock Exchange (NSE), the 50-share S&P CNX Nifty ended at 5,862.7 points -- up 0.56 percent.
Broader markets did relatively better, with the BSE midcap index ending 1.39 percent up and the BSE smallcap index moving 1.9 percent higher.
Realty stocks bounced back strong after the battering they received in last week's trade over the bribery scandal involving top financial instiutions and real estate developers.
Among other major gaining scrips were from the consumer durables and power sectors, while the energy index on the BSE was in losses, pulled down by a drop in Reliance Industries, which fell over 1 percent.
Among the gainers on the Sensex were DLF, up 7 percent at Rs.307.25; Bharti Airtel, up 6.45 percent at Rs.360.40; Tata Motors, up 4.31 percent at Rs.1,237.10 and SBI, up 3.97 percent at Rs.2,994.10.
Major losers included Tata Steel, down 1.48 percent at Rs.584.20; Reliance Industries, down 1.14 percent at Rs.986.80; Tata Power, down 0.9 percent at Rs.1,290.30, and ICICI Bank, down 0.9 percent at Rs.1,143.65.
The market breadth was negative, with only 804 stocks advancing, compared to 1,153 scrips on the decline, while 57 stocks were unchanged.
Other Asian markets closed in the red, as traders worried over the consequences of another hike in interest rates by China's central bank and worries over the sovereign debt crisis in some European countries.
Hong Kong's Hang Seng ended 0.68 percent lower at 23,007.99 points, while the Shanghai Composite Index shut shop 1.61 percent down at 2,820.18 points.
The Japanese Nikkei closed 1.87 percent lower at 9,937.04 points. European markets, which rose on the back of overnight buying at Wall Street, but fell over continuing concerns about euro-zone sovereign debt.
Around mid-day, Britain's FTSE 100 was trading 0.48 percent up at 5,577.49 points, while the German DAX was 0.93 percent higher at 6,760.38 points.
The French CAC 40 was 0.43 percent up at 3,652.45 points.