The 30-share benchmark index ended 727.04 points higher at 19,997.10 with 27 of its components closing in the green.
The broader 50-share National Stock Exchange (NSE) Nifty index ended 3.81 percent or 216.35 points higher at 5,896.75 on Tuesday.
While the Sensex posted its biggest single-day gain in four years, the rupee closed up at 63.84 against the dollar.
Meanwhile in the New Delhi bullion market, gold recovered by Rs 270 to Rs 31,370 per 10 grams while silver dropped by Rs 970 to Rs 53,330 per kg.
--IBNS (Posted on 10-09-2013)