Persistent foreign fund inflows into equity market also boosted the market sentiment.
An attempt by the former UPA ally to bring a no-trust motion against the Congress-led Government over FDI in retail failed in the Lok Sabha for want of requisite numbers. This supported the uptrend in the market, brokers said.
Placing of key Bills regarding insurance and pension reforms in the winter session too gave a leg-up to the market.
Brokers said buying at low levels in selective counters helped the 30-share Sensex to end in positive zone.
Traders said Indian stock market was also helped by firm Asian trends on reports that President Barack Obama is confident of striking a deal with US Congress on a new budget.
Some short-covering was seen ahead of expiry of derivatives contract on November 29, pushing the BSE benchmark up, they added.
The Bombay Stock Exchange (BSE) sensitive index resumed higher at 18,349.53 and hovered in a range of 18,567.68 and 18,255.69 before ending at 18,506.57, showing a gain of 197.20 points, of 1.08 per cent, over the last week.
The NSE 50-share Nifty also shot up by 52.55 points or 0.94 per cent to 5,626.60.
The Bankex gained by 1.21 per cent as Banking Laws Amendment Bill, 2011, which seeks an increase in the voting rights of large shareholders in private banks to 26 per cent from 10 per cent, will be tabled in the winter session.
"The winter session of Parliament began, but no business was transacted in the first two days, raising concerns over the fate of various Bills which are proposed to be presented and passed in the session," said Dipen Shah, Head of PCG Research, Kotak Securities.
"Next week is a truncated trading week. In the coming week, markets may remain volatile as traders roll over positions in the futures and options (F&O) segment from the near month November 2012 series to December 2012 series. The near-month November 2012 derivatives contracts expire on Thursday, November 29, 2012," a broker said.
Foreign Institutional Investors (FIIs) continued their buying spree by investing net Rs 1,671.47 crs during the week including the provisional figure of Novermber 23. Major gainers from the sensex pack were M&M 6.67 per cent, followed by ITC 4.32 per cent, HDFC Bank 4.21 per cent, Maruti 3.84 per cent, Sun Pharma 3.86 per cent, Tata Power 2.92 per cent, Coal India 2.01 per cent and Wipro 1.99 per cent.
Among other sectorial indices, the BSE-FMCG shot up by 2.57 pc followed by BSE-Auto 1.53 pc, BSE-Teck 1.19 pc and BSE-IT 1.13 pc while BSE-PSU dropped by 1.23 pc, BSE-Power 1.20 pc and the BSE-Realty 1.06 pc.
The total turnover at BSE and NSE rose to Rs 9,738.30 crore and Rs 45,600.92 crore, respectively from the last weekend\'s level of Rs 9,614.72 crore and Rs 41,035,25 crore.
Forex: The rupee continued its south-bound journey for the fourth consecutive week to end down by 35 paise at 2-1/2-month low of 55.51 against the Greenback on heavy dollar demand from importers and some banks.
However, firm local equities, sustained capital inflows and weak dollar overseas capped the rupee fall to some extent, a dealer said.
Adjournment of Lok Sabha for the first two days of the winter session of Parliament also weighed on the rupee, as the government could not able to bring more economic reforms to improve the sagging economy.
At the Interbank Foreign Exchange (Forex) market, the local currency commenced the week better at 55.07 a dollar as against last weekend's close of 55.16 and touched a high of 54.79 on Tuesday on firm dollar overseas amid sustained capital inflows.
However, later it turned negative and declined further to a low of 55.61 before concluding the week at 55.51, showing a net loss of 35 paise, or 0.63 per cent. In four weeks, the rupee has tumbled by 195 paise or 3.64 per cent. Previously, it had settled at 55.66 on September 6, 2012.
The BSE benchmark Sensex closed the week up by 197.20 points or 1.08 per cent, while FIIs bought shares worth Rs 1,671.47 crore, including provisional data of November 23.
The U.S. dollar slumped against its six major rivals as investors showed a growing appetite for stocks, reducing the safe-haven appeal of the greenback.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said," A better start for the week was followed by sharp weakness in INR which continued to remain volatile with a weak note during the week witnessing sharp declines on the last day of the week while closing on a 10-week low."
"The domestic fundamentals continued to dominate the Indian currency trade which defied reacting along with the gains of cable and other emerging market currencies. "The opposition along with ex coalition partners of the government demand for a vote on FDI in retail and also pressured the government for a no confidence motion in parliament.
The political embargo if continues shall witness the INR easing above the 56.00 levels.
"The sheer disappointment in the participation of 2G auction where most of the circles remained unauctioned due to higher prices also dented the rupee performance," he added.
"For the week Importers can create a partial hedge around the 55.00-54.50 levels for their payments and Exporters can use the weakness towards 55.80 - 56.20 levels to initiate short hedge to cover their receipts.
"The crucial levels for INR appreciation are 54.80 levels and for depreciation the 55.80 levels can be closely watched as rise above 55.80 levels shall weaken the pair till 56.20 levels. Strong support is placed at 55.10 levels whereas resistance is pegged at 55.80 - 56.00 levels. Buy in dip to 55.10 with a stop loss below 54.50," he further commented.
RBI fixed the reference rate for US dollar and euro at Rs 55.3445 and Rs 71.3665 from Rs 54.9915 and Rs 70.2230 last weekend, respectively.
The rupee premium for the forward dollar ended steady to easy on fresh receipts by exporters.
The benchmark six-month forward dollar payable in April settled down at 141-142 paise from last weekend's close of 144-1/2-146-1/2 paise.
However, far-forward contract maturing in October ended stable at its last weekend's closing level of 280-1/2-282-1/2 paise.
The rupee dropped further against Pound Sterling to end the week at 88.48 from preceding weekend's level of 87.40 and also remained weak against the euro to close at 71.61 from last weekend's level of 70.25.
However, it firmed up further against the Japanese yen to finish at 67.49 per 100 yen from previous weekend's levelof 67.98.