Brokers said fresh buying in stocks available at lower levels amid a better trend in Asian region also influenced the markets.
The 30-share barometer rose by 268.86 points, or 1.54 per cent, to 17,772.10 in opening trade. The Sensex had gained nearly 357 points in the previous session.
Stocks in the consumer durable, banking, IT, capital goods, technology, refinery, auto, and metal sectors led the rally.
Similarly, the broad-based National Stock Exchange Nifty index also gained 88.35 points, or 1.54 per cent, to 5,421.90.
In a surprise move, the RBI on Friday cut the cash reserve ratio (CRR) by 0.75 percentage point to infuse liquidity in the system.