The market capitalisation of BSE-listed firms rallied Rs 3,29,520.27 crore to reach Rs 3,25,40,108.97 crore.
"The market's strong gap-up jump in response to positive global cues on account of the softer than anticipated US and UK inflation data highlights the optimism for an end to the interest rate cycle, as evidenced by the ease in bond yields.
"This is likely to draw FII flows into emerging markets, which is good for India considering the current better earnings season and the festive demand pick-up. The drop in the CPI for India also improved the mood," said Vinod Nair, Head of Research at Geojit Financial Services.
Among the Sensex firms, Tech Mahindra, Tata Motors, Infosys, Wipro, Tata Steel, Tata Consultancy Services, Reliance Industries and Axis Bank were the major gainers.
In contrast,
In the broader market, the BSE smallcap gauge jumped 1.13 per cent, and the midcap index climbed 0.91 per cent.
All indices ended in the green, with realty zooming by 2.97 per cent, IT rallying 2.29 per cent, teck jumping 2.12 per cent, auto climbing 1.65 per cent, oil & gas (1.55 per cent) and energy (1.41 per cent).
In Asian markets, Seoul, Tokyo, Shanghai and Hong Kong settled in the positive territory.
European markets were trading in the green. The US markets ended with significant gains on Tuesday.
Equity markets were closed on Tuesday on account of Diwali Balipratipada.
"Domestic equities surged higher fuelled by moderation in both India as well as US inflation,"
As many as 2,215 firms advanced, while 1,538 declined and 131 remained unchanged on BSE.