Short - covering, coupled with value buying and hopes of budgetary announcements on further economic reforms buoyed the Indian equity markets on Monday.
The positive global indices on the back of expected future stimulus measures in Europe and Japan supported the relief rally.
This led a barometer index of the Indian equity markets to close the day's trade up 568 points.
The gains at the bellwether indices of the Indian equity markets came a week after they had plunged by more than 6. 50 percent each. The massive corrections made prices attractive and triggered value buying.
Initially, both indices opened on a positive note, following a major rise in the Japanese barometer index and healthy gains recorded at the US markets on last Friday.
Besides, a rise in crude oil prices which climbed around the $30 a barrel mark (one barrel is equal to 159 litres) led investors to chase stock prices higher.
In addition, a better - than - expected annual inflation rate and a stable rupee supported the equity markets rally.
The Indian rupee rose on the back of appreciation in the Chinese yuan and the relief rally in the equity markets.
The Indian rupee strengthened by 0. 17 paise to close at 68. 06 to a US dollar from its previous close of 68. 23 to a greenback.
Moreover, investors' confidence was restored after Finance Minister Arun Jaitley made comments on the upcoming budgetary announcements and expected banking sector reforms.
Market participants are hopeful that the central government may increase expenditure, announce tax concessions and pave the way to reduce the NPAs (non - performing assets) levels of the banking sector.
Consequently, the barometer 30 - scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) rose by 568 points or 2. 47 percent.
Similarly, the wider 50 - scrip Nifty of the National Stock Exchange (NSE) ended with healthy gains. It closed higher by 182 points or 2. 61 percent at 7, 162. 95 points.
The S&P BSE Sensex, which opened at 23, 223. 43 points, closed at 23, 554. 12 points - - up 568 points or 2. 47 percent from the previous day's close at 22, 986. 12 points.
During the intra - day trade, the Sensex touched a high of 23, 7622. 64 points and a low of 23, 197. 67 points.
The BSE market breadth favoured the bulls - - with 2001 advances and only 660 declines.
"Short - coverings and value buying due to attractive valuation after last week's free falls led to today's relief rally, " Anand James, co - head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.
"Higher crude oil prices, positive global indices and a stable rupee supported the markets gains. "
Vaibhav Agarwal, vice president and research head at Angel Broking, elaborated that buying was witnessed across markets on hopes of European and Japanese central banks initiating further stimulus measures.
"Buying was witnessed across the board with a strong rally in mid and smallcaps. A positive opening in Europe also helped the markets, " Agarwal pointed out.
"We expect markets to continue to react to global cues and expectations centred around the budget. "
Nitasha Shankar, vice president for research with YES Securities, cited that Indian markets extended gains in late trade to end on a strong note, suggesting a temporary pause in the downtrend.
"Broader markets snapped its five days of losses, outperforming the headline indices, " Shankar noted.
"Bank, metal and reality indices topped the gainers chart, while all other sectorial indices ended in the green. "
Sector - wise, capital goods, automobile, banking, metal, oil and gas and healthcare indices of the BSE made healthy gains.
The S&P BSE capital goods index zoomed by 756. 75 points, automobile index rocketed by 677. 36 points, banking index augmented by 573. 24 points, metal index appreciated by 556. 50 points.
The S&P BSE oil and gas index swelled by 323. 01 points, followed by healthcare index which buoyed by 201. 67 points, information technology (IT) index edged - higher by 159. 53 points, industrials index gained by 121. 89 points, energy index rose by 101. 17 points and fast moving consumer goods (FMCG) index was up 86. 03 points.
The foreign institutional investors (FIIs) were net sellers during the day's trade, while the domestic institutional investors (DIIs) bought stocks.
The data with stock exchanges showed that FIIs divested Rs. 1, 311. 59 crore, while the DIIs' bought stocks worth Rs. 1, 987. 45 crore.
Major Sensex gainers during Monday's trade were Tata Steel, up 13. 01 percent at Rs. 246. 20; Larsen and Toubro (L&T), up 9. 06 percent at Rs. 1, 149. 15; State Bank of India (SBI), up 7. 94 percent at Rs. 167. 25; Adani Ports, up 7. 02 percent at Rs. 191. 25; and Axis Bank, up 6. 83 percent at Rs. 417. 50.
Major Sensex losers during the day's trade were Bharti Airtel, down 2. 03 percent at Rs. 318. 65; Hindustan Unilever, down 0. 73 percent at Rs. 805 and HDFC, down 0. 24 percent at Rs. 1, 081. 10.