The Bombay Stock Exchange benchmark Sensex regained the 17,000 points level after rising by 143 points on buying by funds following impressive industrial growth data and firming trends in global markets.
The 30-share index advanced further by 142.87 points to close at 17,064.95 points. The barometer had risen by 305 points in last two trading sessions.
The broad-based National Stock Exchange index Nifty spurted by 40.75 points to 5,119.35 points.
Brokers said official data showed that industrial output rose by 17.6 per cent in April on good showing by manufacturing, particularly capital and consumer goods, which sparked buying particularly in oil& gas, capital goods and auto stocks.
Trading sentiment further fuelled as world stocks extended gains for the fourth day on optimism over global economic growth.
On the domestic bourse, the current rally was led by market leader Reliance Industries, which jumped 3.03 per cent to Rs 1,046.25 following reports that the company in talks to acquire stake in Infotel and close to buying up to 40 per cent stake in Shale Gas assets owned by Texas-based Pioneer Natural Resourses.
Reliance also found additional oil in a block in the western state of Gujarat and is assessing the viability of the find that may help increase domestic fuel supplies.
Among the 30 index components, 21 stocks closed with gains.
Asian stock markets ended higher with the key benchmark indices in Japan, China, South Korea, Hong Kong, Taiwan and Singapore closing higher between 0.29 per cent and 1.70 per cent.
European shares were trading higher in the early trade, rising for the third day on optimism over global growth. Key indices in the UK, Germany and France rose by 0.29 to 0.92 per cent.