The index rose 91.55 points to end at 10,582.60 on widespread buying in realty, auto, banks, financials, media, infra and metals sectors.
However, IT was the worst performing index as rupee witnessed a pullback against the US dollar. Weakness also persisted in pharma, PSU bank and FMCG stocks, which capped the gains.
The government is poised to release the key GDP data for October-December quarter on Wednesday, while fiscal deficit and manufacturing PMI numbers are also expected during the week.
Asian markets closed higher, tracking gains seen on Wall Street as US bond yields receded from recent four-year highs.
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The Nifty 50 index rose 91.55 points or 0.87 percent to end at 10,582.60 after hovering in a range of 10,592.95 and 10,520.20. It saw an intra-day movement of about 72.75 points.
On the sectoral front, Nifty Realty rose 3.13 per cent, Auto 2.24 per cent, Media 1.95 per cent, Private Bank 1.86 per cent, Bank 1.52 per cent, Finance Service 1.52 per cent, Infra 1.59 per cent, Metal 1.07 per cent and Energy 0.67 per cent.
Major index gainers were Maruti, Tata Motors, L&T, Axis Bank, IndusInd Bank, UPL, Zee and Bajaj Finance.
The losers were Sun Pharma, Infosys, TCS, Tech Mahindra, Wipro, Cipla, HCL Tech, NTPC and SBI.
The market breadth, indicating its overall health, turned positive. A total of 1,075 scrips advanced, 738 declined, while 60 remained unchanged.
As many as 223 securities hit their price bands.
Turnover in the cash segment fell to Rs 29,176.42 crore from Rs 32,327.68 crore as on last Friday.
A total of 15,336.13 lakh shares changed hands in 1,02,56,657 trades. The market capitalisation of listed firms on the NSE stood at Rs 1,46,54,981.09 crore.