Sensex jumped 447 points or 0.90 per cent to close at 50,297; while the broader NSE Nifty moved 158 points or 1.07 per cent higher to settle at 14,919.
Major gainers in the BSE pack included Mahindra & Mahindra, NTPC, Bajaj Auto, Tech Mahindra, TCS and Maruti Suzuki with their shares up as much as 4.98 per cent.
On the NSE platform, except for Nifty PSU Bank, all other sub-indices finished in green with Nifty Auto and Nifty IT outperforming the index by rising as much as 3.19 per cent.
Both the indexes had advanced as much as 1.5 per cent on Monday as a halt in the recent US bond markets selloff buoyed riskier assets.
On the domestic front, expansion of a vaccination drive and upbeat domestic economic growth also supported investor sentiment.
“In the brief fight between equity bulls and bond bears, it appears that equity bulls have won,” VK Vijaykumar, chief investment strategist at Geojit Financial Services told news agency Reuters.
Meanwhile, foreign investors purchased equities worth Rs 125.15 crore on a net basis in Indian capital markets on Monday, exchange data showed.
(With inputs from agencies)