MUMBAI (Reuters) - India's stock markets jumped more than 2 percent on Monday, heading for their biggest daily gain in more than a year as rallies in global markets boosted risk appetite and sent stocks of recently battered lenders such as State Bank of India (SBI) sharply higher.
Asian stocks rebounded from recent weakness as fears over global economic slowdown eased and as U.S. crude prices rallied from more than 12-year lows. China's central bank also fixed the yuan higher as markets in Asia's largest economy returned from a week-long holiday.
The gains, which follow rallies in Europe and the Wall Street on Friday, were sparked after Indian indexes last week posted their biggest weekly losses since July 2009 due to disappointing corporate earnings and weak global markets.
"Markets were in a bit of an oversold territory so it's a pullback that we are seeing today," said Alex Mathews, head of research at Geojit BNP Paribas.
Mathews added that markets will largely be driven by global cues and the upcoming Budget on February 29.
The broader NSE Nifty was up 2.15 percent as of 12:12 p.m., and the benchmark BSE Sensex was 1.91 percent higher, both heading for their biggest daily gains since January 15, 2015.
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SBI shares surged 7 percent after falling almost 9 percent last week. India's biggest lender on Friday reported the biggest fall in its quarterly profit in nearly five years as bad loan provisions jumped.
Stocks of other state-owned lenders that fell heavily last week also rebounded sharply. Bank of Baroda jumped as much as 15 percent on Monday after Chief Executive P.S. Jayakumar said the bank expected a "fair bit of stability" in its asset quality in the quarters ahead.
Coal India rose about 4 percent on hopes it would also announce a dividend after state-owned miner NMDC Ltd declared its first interim dividend on Friday.
Adani Ports and Special Economic Zone rose as much as 5.93 percent after Macquarie upgraded it to 'outperform' from 'neutral', saying the stock amply prices in risks on volume growth after a 50 percent correction in last six months.
Exchanges operator Financial Technologies declined 16.5 pct to record low of 75.10 rupees on reports that the Indian government had ordered a merger with National Spot Exchange.
(Reporting by Aastha Agnihotri; Editing by Anupama Dwivedi)