The Sensex and Nifty ended higher by nearly 2 per cent as software services exporters such as Infosys Ltd and drug makers, including Sun Pharma Ltd, surged due to a weaker rupee.
The 30-share BSE index Sensex closed higher by 456.17 points or 1.76 per cent at 26,316.34, posting its biggest single-day percentage gain since October 18, and a weekly gain of 0.6 per cent.
The 50-share NSE index Nifty ended up 148.8 points or 1.87 per cent at 8,114.30 and advanced 0.5 per cent for the week.
Among BSE sectoral indices, IT index gained the most by 4.69 per cent, TECk 3.79 per cent, healthcare 2.35 per cent and consumer durables 1.74 per cent.
Top five Sensex gainers wereTCS (+5.23%), Infosys (+4.78%), Sun Pharma (+4.18%),GAIL (+3.48%) and Lupin (+3.36%), while the major losers were Bajaj Auto (-0.74%), State Bank of India (-0.29%), and Bharti Airtel (-0.22%).
The rupee rebounded to 68.46 per dollar from a record low of 68.8650 hit in the previous session after heavy intervention by the central bank in the morning, though traders said they expected the local currency to remain under pressure due to a rally in the greenback.
Sentiment was also boosted as Asian shares advanced, while low roll-overs at the expiry of monthly derivatives on Thursday spurred more buying in cash markets.
Anand James, chief market strategist at Geojit BNP Paribas Financial Services, said he expected markets would remain under pressure in the near term.
“Significant buying was expected today after derivatives rollover figures were the least in last three to four months," he said.
“Demonetisation will continue to impact the market in the near term.”
A report by SMC Global said: "Asian markets opened on a positive note and stocks are trading on positive side since last one month. Prospect of higher interest rates in the US boosted the dollar. US equity markets were shut on Thursday on account of the Thanksgiving holiday. The leading index for Japan, which measures the future economic activity, decreased more than initially estimated in September, final figures from the Cabinet Office showed. The leading index fell to 100.3 in September from 100.9 in the previous month. The preliminary reading for September was 100.5. The coincident index that reflects the current economic activity, climbed to 112.7 in from 111.9 in August. The September figure was revised up from 112.1.Similarly,the lagging index that indicates the past economic activity, rose to 113.9 in September from 113.0 a month ago."