The Sensex and the Nifty surged nearly 1.08 per cent at the closing session on Monday on heavy capital inflows anticipating improvement in key macroeconomic indicators - inflation, forex reserves and industrial production to be announced this week.
The 30-share BSE index Sensex surged 293.15 points to end at 27,319.85 and the 50-share NSE index Nifty gained 87.05 points to close at 8,173.90.
Rajesh Agarwal, Head-Research, Eastern Financiers, said in a report: "The markets will take cues from important macroeconomic data that would be announced during the week such as inflation, forex reserves and industrial production growth. As revealed by last week’s FII robust net investment data, the markets are seeing bullish undercurrent and we do not expect to see any substantial correction during the week. Overall, we expect markets to continue their general up-move with intermittent profit-booking."
Barring consumer durables, all other BSE sectoral indices ended in the green. Among them, oil & gas index gained the most by 1.79 per cent, followed by FMCG 1.4 per cent, capital goods 1.29 per cent and metal 1.25 per cent. Only consumer durables index was down 0.22 per cent.
Hindalco, ONGC, SBIN, Wipro and HUL were the major Sensex gainers, while NTPC, M&M, Tata Power and BHEL were the only losers among 30-share Sensex constituents.
European stocks fell as investors weighed equity valuations after the Stoxx Europe 600 Index completed its fourth weekly rally, while UK banks retreated on concerns that Scotland will vote for independence.
The Stoxx 600 retreated 0.7 per cent to 345.23 at 10.01 a.m. in London.
Most Asian stocks rose as investors weighed data showing Chinese exports rose more than analysts projected last month, while imports unexpectedly fell.
The MSCI Asia Pacific Index was up 0.1 per cent at 148.54 as of 2.10 p.m. in Hong Kong.
A plunge in sterling after a poll showed rising support for Scottish independence helped bolster the dollar.
Sterling plummeted 0.8 per cent to $1.6207 after sliding as low as $1.6165 in early trade, the lowest since last November and the biggest daily drop in eight months, after a poll showed the "yes" to Scottish independence campaign on 51 percent against 49 percent for the "no" camp.
Data on Friday showed US non-farm payrolls grew by only 142,000 last month, far below the 225,000 forecast by analysts in a Reuters poll.
The downbeat jobs report suggested the Federal Reserve will hold off on hiking interest rates anytime soon, and helped the S&P 500 hit a fresh closing high.
Data released before Tokyo opened showed Japan's economy shrank an annualised 7.1 per cent in April-June from the previous quarter, revised down from a preliminary 6.8 per cent contraction due to weaker-than-expected capital spending.
Later in the day, investors await Chinese trade data for August, and will be scanning the report for any signs of weakness after a spate of recent data raised concerns about the impact of a cooling property sector.