The S&P BSE Sensex rebounded by 150 points on Monday, mainly led by renewed buying of shares in banking and capital good sectors despite a sell-off in global markets in the wake of terror attacks in Paris that left at least 129 people dead and about 350 injured.
The Sensex closed at 25,760 points, up 0.58%, while the 50-share Nifty rose 44 points, or 0.57%, to end at 7,806.
"The Indian equity markets started off the week on a high as the benchmark indices seem to have neglected negative vibes from Asian markets. Equity markets across the globe were under pressure after a global selloff following Friday's deadly attacks in Paris. However, the stock markets in India outperformed its Asian peers on hopes that the government will manage to pass the GST bill in the upcoming winter session of Parliament," said Amar Ambani, Head of Research, IIFL.
The Sensex opened at 25,580, touched an intra-day high of 25,866 and low of 25,451 before ending the session.
Markets had been under selling pressure for the past three weeks, as sluggish second quarter earnings, Bihar elections and rising expectations over interest rate hike by the US central bank in December weighed on investors' sentiment.
Meanwhile, an official data showed that India's Wholesale Price Index (WPI) inflation remained in negative territory for the 12th consecutive month in October.
"The WPI figures were more or less in line with street expectations. However, food inflation which increased is a concern. While the WPI remains negative the CPI has started inching up. We believe that the central bank will stay on course in terms of providing further relief on rates with 25 basis points cut by the end of the current fiscal," Business Standard quoted Tirthankar Patnaik, India Strategist, Mizuho Bank, as saying.
Sentiment also got boosted after the finance minister Arun Jaitley said that India's gross domestic product (GDP) will grow by over 7.3% in the current financial year despite weakness in rural demand on account of deficient monsoon rainfall in the past two seasons, The Financial Express reported.
Besides, market sentiment was underpinned by Prime Minister Narendra Modi who said India witnessed a 40% increase in foreign direct investment (FDI) flows since last year.
Risk aversion following the Paris attacks led to a sell-off in the global markets, with China's Shanghai Composite index closing 0.4% lower and Hong Kong's Hang Seng ending 0.8% down.
Among the BSE sectoral indices, Bankex and Capital Goods were the biggest gainers, while IT was the top loser. Selling in IT shares continued as the US is set to pass a bill that restricts the usage of H1-B visas by Indian software firms.
The rupee appreciated by 10 paise to 66 against the US dollar on the back of a rebound in domestic equity markets.