Despite severe volatility, the Indian equity markets made gains during the day's trade, with a benchmark index closing 149.57 points or 0.58 percent up on Monday.
Both the bellwether indices of the Indian equity markets opened for trade lower in sync with their Asian peers.
The Asian markets receded, as investors were spooked after Paris terror attacks and latest data on Japan which showed that the economy has entered into a recession.
The bearish global sentiment depressed Indian equities, with both the bellwether indices falling to their lowest levels since September 29.
However, strong buying in banking stocks gave a lift to the Indian markets and helped benchmark indices shrug off their opening losses.
The benchmark 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) gained 149.57 points or 0.58 percent.
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Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) made modest gains during the day's trade. It closed higher by 44.35 points or 0.57 percent at 7,806.60 points.
The S&P BSE Sensex, which opened 25,580.15 points, closed at 25,760.10 points -- up 149.57 points or 0.58 percent from the previous day's close at 25,610.53 points.
The Sensex touched a high of 25,866.42 points and a low of 25,709.23 points during the intra-day trade.
Market observers said the recent reforms to hike foreign direct investment (FDI) limits in various sectors provided a sentiment boost to the investors.
"There were fears that the risk appetite of Indian investors may take a hit as Paris attacks had dragged other Asian equities lower. However, a firm rupee and recent FDI reforms gave a launch pad for recovery," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.
"A certain restraint was still visible, with FOMC (Federal Open Market Committee) minutes of the October meeting scheduled for release on November 19 this month," James said.
The October meeting minutes of FOMC will give further cues on whether or not the US Fed will raise interest rates in December.
Other market analysts said that the investors' sentiments turned bullish after news reports indicated a heightened chances of goods and services tax (GST) bill getting passed in this winter sesion.
"Indices extends gains on news that government is ready to make some amendments on GST bill and chief opposition party Congress has soften his stand which gives the hopes of passing the bill in the upcoming winter session of parliament," said Gaurav Jain, director with Hem Securities.
The rupee closed Monday's trade higher by 11 paise at 65.99 to a US dollar from its previous day's close of 66.10 to a greenback.
The foreign institutional investors (FIIs) were net sellers in the day's trade at stock exchanges, whereas the domestic institutional investors (DIIs) were net buyers.
According to data with stock exchanges, the FIIs sold stocks worth Rs.1,051.26 crore, while the DIIs bought stocks worth Rs.661.71 crore.
Sector-wise, information technology (IT), technology, entertainment and media (TECK) and consumer durables. On the other hand, banking, capital goods and healthcare stocks gained.
The S&P BSE IT index receded by 105.98 points, TECK index was lower by 52.03 points and consumer durables index was down by 7.70 points.
The banking index augmented by 292.34 points, capital goods index gained by 151.11 points and healthcare index was higher by 79.32 points.
Major Sensex gainers during Monday's trade were Gail, up 4.62 percent at Rs.294.65; Tata Steel, up 3.44 percent at Rs.229.80; Dr. Reddy's Lab, up 3.43 percent at Rs.3,500.50; State Bank of India (SBI), up 3.23 percent at Rs.247.95; and Vedanta, up 2.75 percent at Rs.89.65.
The major Sensex losers were Coal India, down 1.94 percent at Rs.331.10; Infosys, down 1.86 percent at Rs.1,080.20; Hindustan Unilever, down 1.54 percent at Rs.784.75; Tata Consultancy Services (TCS), down 0.93 percent at Rs.2,374.90; and Tata Motors, down 0.66 percent at Rs.400.20.