The Sensex and the Nifty surged in early morning trades as election results in Maharashtra and Haryana raised hopes that there would be a new set of economic reforms unleashed.
ONGC rallied a huge 5 per cent following the hike in gas prices, while IGL also joined ONGC higher. BPCL and HPCL on the other hand rallied 6 per cent after the prices of diesel were deregulated.
Oberoi Realty and Zee also gained ground after the stocks were upgraded by brokerages.
United Spirits was also trading higher ahead of its results.
PSU banking stocks were having a spectacular run with most of the stocks up between 2 and 5 per cent. TCS which has fallen as much as 9 per cent on Friday was marginally up in trade.
Mid cap stocks also gained ground with winners being Havells India, Unitech and IDBI Bank.
Meanwhile, markets across the globe staged a spectacular rally following the US rally last week.