The Bombay Stock Exchange (BSE) benchmark 30-share sensitivity index, the Sensex, began the new week on a positive note ending up strongly 395 points at 19,248.
The main index opened with a positive gap of 318 points at 19,171 on the back of positive cues from the global markets and touched a high of 19,360 in early trade.
However, intraday profit-taking saw the index fall to 19,138 before it rallied to end up 2 percent.
The index lost 4.3 percent last week after having fallen 7 percent over six sessions to Thursday. It has put on nearly 4 percent in the last two sessions.
Among the sectoral indices, the metal, realty and IT index showed promise. The BSE Metal index surged over 5 percent to 17,525. The Realty index rallied 3 percent to 10,081, and the IT index climbed 2 percent at 4098.
Other indices to perform well are the Bankex, which firmed up by 1.7 percent, the FMCG (1.63 percent), Healthcare (1.4 percent), Oil & Gas (1.9 percent), PSU (1.52 percent) and the Auto index (0.74 percent).
Reflecting investors' appetite for stocks from midcap and smallcap segments, the BSE Midcap and Smallcap indices climbed up 1.89 percent and 1.69 percent respectively.
The market breadth was fairly positive - out of 2865 stocks traded, 1813 advanced, 996 declined and 56 remained unchanged.
The Sensex surge was led by index heavyweight Reliance Industries which rose 2.5 percent to Rs.2882.85 after it said late on Friday it had sold 4.01 percent of subsidiary Reliance Petroleum for Rs.4020 crore.
India's second largest private sector bank, HDFC Bank surged over 5 percent to Rs.1644.
Bharti Airtel and Reliance Energy soared 3.7 percent each to Rs.948 and Rs.1790, respectively.
Tata Steel, ONGC and Hindalco rallied over 3 percent each to Rs.849, Rs.1184 and Rs.194 respectively.
Grasim surged 3 percent to Rs.3734. DLF Ltd and TCS gained 2.7 percent each at Rs.892 and Rs.985, respectively.
Reliance, BHEL and Wipro moved up 2.5 percent each to Rs.2883, Rs.2605 and Rs.453 respectively.
Satyam, Hindustan Unilever and Bajaj Auto were up over 2 percent each at Rs.426, Rs.210 and Rs.2587 respectively.
Tata Motors (down 0.64 percent) and State Bank of India (0.28 percent) were the major losers.
The broader S&P CNX Nifty of the National Stock Exchange (NSE) too rallied strongly for the day surging 2.19 percent up at 5,731.70 points.
The markets are mainly moving on overseas cues... it could go up further and then correct, Reuters quoted Subash Gangadharan, a technical analyst with HDFC Securities as saying.
Overall, on a two to three months perspective, we are positive on the market, Gangadharan said.
Elsewhere in the region, Karachi's 100-Share index edged up 0.33 percent at 13,776.95 points, while Colombo's All-Share index fell 0.43 percent to 2573.67 points.