Steel stocks, including Tata Steel Ltd, Jindal Steel & Power Ltd, JSW Steel and Steel Authority of India, rose 4.3-9.5 per cent.
Stocks of domestic steel companies rallied as according to a state media report China will completely stop production of highly polluting low-end steel by June-end to tackle smog.
Analysts have also cited that a fall in the prices of coking coal, used in steel manufacturing, has also aided the steel companies.
Tata Steel jumped to its highest since December 9, 2014, while JSW Steel rose to its all-time high and Visa Steel Ltd jumped as much as 15.7 per cent.