After rising to a day's high of 19,205.33, Sensex closed with a gain of 328.83 points, or 1.75 per cent, at 19,170.91.

This is the third straight day the benchmark has gained.

Brokers said investors appeared confident that the UPA government will excel in a trial of strength over FDI in retail issue to be witnessed in Parliament next week.

The Lok Sabha has decided to have a discussion on December 4 and 5 on the issue under a rule that entails voting.

In the 30-share Sensex, 26 stocks closed with gains led by Bajaj Auto, ICICI Bank, Tata Motors, Cipla and Sterlite.

L&T, HDFC, HDFC Bank, Reliance Industries and ITC also helped cement the index's gains.

Across the BSE, over 1680 stocks gained today, helping the market cap zoom to Rs 66.74 lakh crore, up Rs 80,000 crore in a single session.

"Markets rose sharply for the second successive day. we touched new calendar year highs during the day. Markets have started factoring in some further announcements on fiscal reforms with the deadlock on retail FDI issue being resolved and discussion expected to happen next week," said Dipen Shah, Head of PCG Research, Kotak Securities.

A smooth ending of the current month's settlement in the derivative segment and a higher global trend as optimism grew that US President Barack Obama will reach an agreement with Congress over a new budget, further influenced the sentiment.

The 50-share National Stock Exchange index Nifty closed 97.55 points, or 1.70 per cent, higher at 5,825.

S&P CNX Nifty Index may rise 14 per cent by 2013-end, Goldman Sachs Group Inc said in a report today, upgrading its recommendation on India to overweight from market-weight.

"For India, upside drivers include a recovery in growth, a decline in inflation, and the potential for continued policy reforms," Goldman Sachs said adding that with structural issues being addressed and a cyclical recovery on the horizon, the market may bounce strongly next year.

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