Short-coverings by operators ahead of the expiry of the October derivative contracts tomorrow also boosted the market sentiment.
The BSE 30-share benchmark, Sensex, resumed higher and shot up to 17,104.88 before quoting at 17,085.34 at 1015 hrs, showing a net gain of 299.70 points or 1.79 per cent from Friday's closing level.
The NSE 50-share Nifty also rose by 85.40 points or 1.69 per cent to 5,135.35 at 1015hrs. Major gainers were Tata Motors (4.36 per cent), TCS (3.63 pc), Sterlite Ind (3.13 pc), Bajaj Auto (2.90 pc), ONGC (2.75 pc), Hindalco (2.55 pc) and Jaiprakash Asso (2.44 pc). Asian stocks advanced in the early trade, while US markets settled higher on Friday after euro-zone leaders made some progress towards a strategy to tackle the region's debt crisis.
Key benchmark indices in South Korea, Hong Kong, Taiwan, Singapore and Japan were up by between 1.35 per cent to 3.51 per cent.