The benchmark index surged above the 10,000 levels in late trade on Thursday, the expiry day of the March series of futures, on short-covering. Positive global markets also buoyed investor sentiment.
The Sensex was trading at 10,004, up 336 points.
Asian markets mostly gained as better-than-forecast economic data in the US buoyed hopes that government stimulus measures are starting to heal the global economy.
The rally in the Indian markets was led mostly by capital goods, metal and banking stocks. Havells and Crompton Greaves, both up 14 per cent, were the biggest gainers in the capital goods pack.
Realty stocks however traded weak after giving up their early gains.
Among the Sensex stocks, Tata Motors was up over 8 per cent while Sterlite Ind advanced over 7 per cent. Other major gainers include L&T, TCS and BHEL.