The key indices traded with gains of more than 1.5 per cent each as positive global markets, rupee appreciation and short covering enhanced investors' risk-taking appetite.
Sector-wise, healthy buying was witnessed in all the 19 sub-indices of the BSE, led by banking, metal and healthcare stocks.
The wider 51-scrip Nifty of the National Stock Exchange (NSE) surged by 149.05 points or 1.77 per cent, to 8,581.05 points.
The barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 27,605.05 points, traded at 27,689.54 points (at 1.30 p.m.) -- up 437.01 points or 1.60 per cent, from its previous close at 27,252.53 points.
The Sensex has so far touched a high of 27,743.46 points and a low of 27,491.93 points during the intra-day trade.
The BSE market breadth was skewed in favour of the bulls -- with 2,043 advances and 499 declines.
On Wednesday, the key Indian indices reacted adversely to the victory of Republican candidate Donald Trump in the US presidential election and the union government's decision to demonetise Rs 500 and Rs 1,000 currency notes.
The barometer index then plunged by 338.61 points, or 1.23 per cent, and the Nifty had dropped by 111.55 points, or 1.31 per cent.
"The markets are facing a corrective rally and trading on a higher note. The pharma and banking stocks are trading higher," Astha Jain, Senior Research Analyst at Hem Securities, told IANS.
"Another positive trigger for the domestic markets is the Finance Minister's announcement that the Goods and Services Tax will most probably get implemented by September next year. The overall sentiment in the global markets remained positive."
According to Dhruv Desai, Director and Chief Operating Officer of Tradebulls, the CNX Nifty faced some profit booking at higher levels.
"Almost all sector stocks traded firm as they tracked overall healthy buying sentiments in the Indian equity markets," Desai said.
"Positive global cues and bearish USD/INR futures prices are likely to support the market at lower levels, however, it is likely to remain volatile in the second half of the session due to profit booking at higher levels."