The Sensex surged more than 200 points and the Nifty also ended higher on Monday after two days of losses, as software services exporters such as Infosys rallied on a weaker rupee while lenders gained a day before the Reserve Bank of India (RBI)'s policy review.
However, sentiment remained broadly cautious after foreign investors sold a net $175.73 million worth of shares on Friday, the third straight session of net sales that totalled $494.7 million.
Global factors will also be critical after sharp falls late last week. In India, the Nifty fell 2.4 per cent over the previous two sessions to end on Friday at its lowest close since July 15.
"The symptoms are all positive. But everything depends on the RBI policy, which will pave the direction for the short term. Outlooks remains firm and it's still a buy-in-dips market," said Suresh Parmar, head, institutional equities at KJMC Capital Markets.
The broader Nifty ended up 1.07 per cent at 7,683.65, while the Sensex gained 0.95 per cent to 25,723.16. Shares in software services exporters gained after the rupee last week posted its biggest weekly fall since record low levels in August last year.
The local currency rebounded slightly on Monday but was still trading weaker than 61 per dollar. Infosys shares rose 3.72 per cent, marking their biggest single-day gain since June 11. Wipro gained 2.4 per cent, Tech Mahindra added 1.9 per cent and HCL Technologies ended 2.6 per cent higher.
