The benchmark BSE Sensex jumped by 402 points to close at an over two-week high of 27,507.30, led by gains in banking and auto stocks, on hopes of RBI rate cut ahead of inflation and IIP data release.
Similarly, the broader 50-issue NSE Nifty too regained the crucial 8,300-level.
The Government’s move to mollify overseas investors’ taxation worries and a firm trend in overseas markets supported the investor sentiment, traders said.
The 30-share BSE index Sensex surged 401.91 points or 1.48 per cent at 27,507.30 and the 50-share NSE index jumped 133.75 points or 1.63 per cent to 8,325.25.
Barring FMCG, all other BSE sectoral indices ended significantly in the green. Among them, auto and metal indices were the star-performers and were up 2.52 per cent each, followed by banking 2.4 per cent and PSU 2.37 per cent, while FMCG index was down 0.32 per cent.
Top five Sensex gainers were SBIN 5.44%, VEDL 5.34%, Hero MotoCorp 3.59%, HDFC 3.16% and Tata Motors 3.15%, while the major losers were HUL 3.34%, ITC 0.53%, Bharti Airtel 0.41% and Wipro 0.06%.
In line with the overall bullish trend, mid-cap index rose 2.13 per cent, while small-cap gained 1.28 per cent.
On macroeconomic front, inflation data based on consumer price index (CPI) for April and industrial production (IIP) data for March will be released tomorrow.
“Markets bounced back strongly largely on the back of positive domestic as well as global cues,” said Manoj Choraria, a Delhi-based NSE stock broker.
Early trade
The Nifty and the Sensex opened with a gap up on positive global cues. The Nifty opened 51 points up at 8,243, while the Sensex opened 144 points up at 27,249.
A report by SMC Investments and Advisors said: "Asian markets gained as China announced third rate cut in six months to push forward its slowing economy. US stocks gained on stronger-than-expected jobs report for the month of April. Wholesale inventories in the US rose by less than expected in the month of March, according to a report released by the Commerce Department.
The report said wholesale inventories inched up by 0.1 per cent in March after rising by a downwardly revised 0.2 per cent in February. Economists had expected wholesale inventories to climb by 0.3 per cent, matching the increase originally reported for the previous month. Inventories of durable goods rose by 0.5 per cent in March, reflecting notable increases in inventories of furniture and home furnishings and computers,equipment, and software."
Brokers said the pick-up in buying by funds and retailers amid a firm trend in other Asian markets following China’s move to cut interest rates for the third time in six months and a solid US jobs report boosted the market sentiment.
Global markets
European shares slipped lower on Monday as lingering concerns over Greece’s debt situation pegged back the region's stock markets.
Shares in plane maker Airbus also fell after an Airbus A400M military transport plane crashed outside Seville on Saturday, killing four test crew and prompting Britain and Germany to ground Europe’s new troop and cargo carrier.
The pan-European FTSEurofirst 300 index edged down by 0.1 per cent to 1,589.10 points in early session trading, with Airbus shares falling 3 per cent to make them the worst performers on the FTSEurofirst 300.
Asian shares rose on Monday as investors cheered China’s latest cut to interest rates to bolster its flagging economy and after Wall Street rallied on a robust headline reading for US employment.
China had cut interest rates for the third time in six months on Sunday, and analysts predicted policymakers would relax reserve requirements and cut rates again in the coming months.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.3 per cent, moving away from a one-month low touched on Friday. Japan’s Nikkei share average added 1.3 per cent, also moving away from last week’s one-month low.