The BSE 30-share barometer surged 161.95 points, or 0.55 per cent, to 29,584.34. The gauge had gained 103.29 points in the previous two sessions.
All sectoral indices led by oil & gas, FMCG, PSU, metal and bank were in the green, gaining up to 0.72 per cent.
Also, the NSE Nifty surged 47.25 points, or 0.51 per cent, to 9,183.65.
Reliance Industries gained the most among Sensex-30 constituents by climbing 1.62 per cent to Rs 1,391.55.
Firming trend at other Asian markets, tracking overnight gains at the Wall Street on revived hopes of US tax cuts mainly accelerated buying activity on the domestic bourses, brokers said.
Sentiments also got a boost after Bank of Japan said it will keep accommodative policy in place.
In other Asian markets, Japan's Nikkei was up 0.86 per cent while Hong Kong's Hang Seng rose 0.31 per cent in early trade on Friday.
Shanghai Composite Index was marginally up by 0.07 per cent.
The US Dow Jones Industrial Average ended 0.85 per cent higher on Thursday.