Domestic equities in late trade as the Reserve Bank of India Governor Raghuram Rajan's comments that India is currently better prepared to deal with any shocks on the external front compared to last year triggered recovery in rupee against the dollar.
That apart, crude oil prices futures too eased in volatile trade coupled with gains in Asian and European stocks also aided the rally on the domestic bourses.
The popular BSE Sensex garnered 330.71 points or 1.31 per cent to settle at 25,521.71, its highest closing level since June 12, 2014.
The index jumped 355.40 points at the day's high in late trade and fell 85.98 points at the day's low in early afternoon trade.
The 50-unit CNX Nifty at NSE garnered 98.15 points or 1.3 per cent to settle at 7,631.70, its highest closing level since June 12, 2014. The index hit a high of 7,637.60 and a low of 7,509.25 in intraday trade.
The market breadth indicating the overall health of the market was strong. Bank stocks were in demand and among private sector banks, Axis Bank (up 3.88 per cent), ICICI Bank (up 2.36 per cent), IndusInd Bank (up 4.14 per cent), Kotak Mahindra Bank (up 1.55 per cent), HDFC Bank (up 1.06 per cent) gained and Yes Bank stock rose 2.69 per cent.
Among PSU bank stocks, Canara Bank (up 2.96 per cent), Punjab National Bank (up 3.85 per cent), SBI (up 2.74 pc), Union Bank of India (up 4.41 per cent), Bank of India (up 4.01 per cent) and Bank of Baroda (up 3.25 per cent) edged higher.
As far as oil & gas stocks, ONGC extended gains in late trade, while PSU's oil marketing companies extended Monday's gains as the under-recovery on diesel declined for the fortnight commencing June 16, 2014.
Shares of state-run GAIL (India) extended Monday's rally triggered by buzz that a foreign brokerage has raised the price target on the stock.
Cement stocks rose on expectations that cement demand will rise on government's thrust on the infrastructure sector.
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