The BSE Sensex closed the day higher by 304 points, while the S&P CNX Nifty rallied 100 points higher to close the day at 5199.80 points.
Banking shares saw huge buying interest. ICICI Bank rallied more than 3%, while shares of Bank of Baroda and Allahabad Bank rallied smartly after the reported results by these banks for Q1 2013 was better than expected. State Bank of India too saw aggressive buying with the bank's shares ending up more than 4.5%.
Among the auto stocks Maruti Suzuki ended the day steady, while Tata Motors saw buying interest for the second trading day in succession. The shares of Tata Motor's rallied almost 4%.
Meanwhile, Europe was trading higher by 0.50% to 1.25%, following hopes of stimulus measures being unleashed by central banks across the globe, including those in Europe and the US.
Domestically, Indian stocks would eye the credit policy due on Tuesday. Analysts are expecting the RBI to maintain the status quo on with both repo rates and the cash reserve ratio requirement.