India's stock markets rose on Monday recovering from earlier falls of more than 1 percent, marking their highest close in nearly 2-1/2 months, amid a late rally in defensive stocks such as drugmakers Cipla and Dr.Reddy's Laboratories.

The Nifty ended 0.44 percent higher, closing above the psychologically important 8,500 level, while the BSE Sensex ended up 0.41 percent, marking its highest close since April 17.