The Sensex and the Nifty rose over 1.5 per cent on Monday, marking their biggest daily gain in about 1-1/2 months, as rate-sensitive stocks advanced on hopes that improvement in monsoon may lead to an earlier-than-expected rate cut by the central bank.

The 30-share BSE index Sensex surged 414.01 points or 1.52 per cent to 27,730.21 and the 50-share NSE index Nifty jumped 128.15 points or 1.56 per cent to 8,353.10.

All BSE sectoral indices ended significantly in the green. Among them, realty index was the star-performer and was up 5.05 per cent, followed by realty 2.62 per cent, consumer durables 2.42 per cent and IT 1.86 per cent.

Top five Sensex gainers were Axis Bank (+3.62%), ICICI Bank (+3.46%), Infosys (+2.77%), HDFC (+2.5%) and SBIN (+2.19%), while the major losers were Bharti Airtel (-2.25%), Reliance (-0.52%), Wipro (-0.31%), Lupin (-0.29%) and ONGC (-0.16%).

The southwest monsoon rains have been 11 per cent above normal so far in June, stoking hopes the Reserve Bank of India will cut rates in October than in 2016 as anticipated earlier after delivering three cuts of 25 basis points each in 2015 so far.

Greece debt deal

Domestic shares also extended their gaining streak for a seventh consecutive session as investors snapped up risky assets on optimism that Greece and its international creditors will strike a last-minute deal that will see Athens avert default.

Greek Prime Minister Alexis Tsipras will meet the heads of the European Commission, European Central Bank and International Monetary Fund on Monday ahead of a summit of euro zone leaders later in the day aimed at reaching a deal over debt talks.

"Progress on monsoon and stance of US Fed by September end would determine whether or not RBI would cut rates in October," said Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance.

Progress on monsoon, passage of key land and tax reforms in the monsoon session, upcoming GDP data and June-quarter results are key triggers ahead, according to investors and traders.

Media reports related to the central bank's proposal to set the limit for foreign investments for government debt in rupees instead of dollars also lifted the sentiment.

A report by SMC Investments and Advisors said: "Asian stocks climbed with US index futures and the euro extended gains as investors considered the potential fallout from a Greek default ahead of an emergency summit in Brussels. US stocks closed lower on Friday following the Nasdaq's record high as investors eyed developments in the Greece debt negotiations amid quarterly options expirations."

Meanwhile, foreign investors sold shares worth Rs 106.12 crore during Friday’s trading session as per provisional data.

Domestic stock market is expected to remain volatile during the week as traders roll over positions in the futures & options (F&O) segment from the near month June series to July series.

The near month 2015 derivatives contracts expire on Thursday.

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