Benchmark indices surged in trade as global markets remained strong and Asia recovered on comments from Chinese Central Bank governor, that there was no need for continuous depreciation of the Yuan.
Asian markets also surged following a spectacular rally in the US and European markets on Friday with major Asian indices including the Japanese Nikkei and the Hang Sang gaining sharply.
Banking stocks were the big winners in trade on hopes that the government would unleash a series of reforms measures at government owned banks.
Bank of Baroda which reported a huge loss for the quarter ending Dec 31, 2015, jumped despite losses. The stock was up more than 11 per cent in trade.
ICICI Bank, PNB and Bank of India were the other stocks that rallied in trade. All of these stocks were up 3 per cent in trade.
Metal stocks were the biggest gainers in trade with Tata Steel, Hindalco and Vedanta seeing jumps between 4 and 6 per cent each.
Bharti Airtel was the only loser from the Nifty stocks. Mid cap stocks were also having a good session in trade with the recently battered stocks like Just Dial, Voltas and Wockhardt seeing buying interest.
Meanwhile, the rupee was last trading at 68.18 to the US dollar.