After seeing the worst weekly drop since 2009, benchmark indices saw a superb rally in trade, following strong global cues.
The Japanese Nikkei surged a huge 7 per cent, even as most European markets were higher, which pushed Indian markets higher.
The rally today was purely in metals and banking stocks, which have been hammered out of shape. NMDC ended higher by 14 per cent, while Vedanta was up 19 per cent and Tata Steel was up 13 per cent.
The rally in PSU banking stocks was breathtaking after Finance Minister Arun Jaitley promised a fresh set of reforms for PSU banks.
Bank of Baroda led the pack with a huge surge of 22 per cent, while heavyweight State Bank of India jumped 8 per cent and Union Bank was up 10 per cent. Syndicate Bank and Allahabad Bank were up 8 per cent each. The PSU banking index gained almost 9 per cent in trade.
Private sector banking stocks also gained ground with ICICI Bank up 5 per cent and Axis Bank gaining 6 per cent. The Midcap index also jumped 4 per cent, after buying in Jubilant Foodworks, Adani Power, Unitech and Mid cap banking names.
Larsen and Toubro, which has been whacked out of shape in recent weeks, was up a huge 8 per cent in trade.
Meanwhile, European markets staged a remarkable recovery and were trading higher by 2.5 per cent. Except the Shanghai Composite most markets in Asia closed the day with good gains.