The BSE Sensex rallied to its highest close since mid-March led by gains in private sector banks such as ICICI Bank on hopes improving asset quality would lead to better-than-expected earnings in the upcoming reporting season.
Investor sentiment was also boosted by data showing that foreign institutional investors (FIIs) remained buyers of Indian stocks this month, while gains in European stocks also helped.
ICICI Bank shares rose 1.4 percent, while Axis Bank gained 4.1 percent.
The 30-share BSE index <.BSESN> provisionally ended up 1.3 percent to 17,618.35 points, the highest close since March 15. The broader 50-share Nifty gained 1.33 percent to 5,345.35 points.