Markets in Asia also closed higher with Hong Kong's Hang Sang and Singapore Strait Times rallying smartly.
In Europe shares opened on a positive note with the German DAX and the French CAC gaining more than 1%. Markets across the globe continued to show renewed optimism following Fridays' decision by euro zone leaders to allow rescue funds to be used to stabilise the region's banks.
Domestically hopes have been raised on reforms being initiated following Prime Minister Manmohan Singh's decision to handle the finance portfolio. All eyes would now be focussed on the monsoon and how it pans out throughout the country.