Bombay Stock Exchange building
BSE benchmark index Sensex is likely to open on a weak note on Monday.Picture: A man walks past the Bombay Stock Exchange (BSE) building in Mumbai, India, July 15, 2015Reuters file

Domestic stock markets posted their best weekly gains in four months this week, with the benchmark indices ending over 3 percent higher compared to last week.

The rally in the indices was mainly driven by a positive sentiment in global markets, which rose on the expectations of a strong rebound in crude oil prices.

While the BSE Sensex rose 723.03 points, or 3.14 percent, to end the week at 23,709 points, the 50-share Nifty gained 229.80 points, or 3.29 percent, to close at 7,210 points.

"After going through an absolute misery on the bourses in the previous week, finally sanity has prevailed on Dalal Street. The Indian equity markets staged a smart come back with indices registering its best gains in 2016," said IIFL in a note.

"Indices managed to sustain gains even as the Indian rupee hit 52-week lows against the US Dollar during the week. The rupee came exceedingly close to surpassing its previous all time peak of '68.80 per US$ which it had hit in August 2013," it added.

The Indian rupee touched a low of 68.62 versus dollar Wednesday, reaching its lowest level since Aug. 28, 2013. Overall, the rupee has depreciated by more than 3 percent so far this year.

Meanwhile, the rebound in the benchmark indices was mainly led by strong gains in stock prices of metals, PSU banks, realty and auto.

Banking shares staged a rebound, helped by strong buying at lower levels and short-covering ahead of the expiry of contracts in Futures & Options (F&O) segment.

State Bank of India (SBI) rose 3.2 percent Friday shrugging off its warning over further increase in the bank's bad loans. Punjab National Bank (PNB) shares was up over 5 percent. Top state-owned banks have reported a sharp fall in their profits for the December quarter due to higher provisions for bad loans.