Mumbai: Stocks on Monday rose for the first time in six days, with the benchmark Sensex rebounding over 235 points to end at 31,449 as investors took comfort from tentative signs of tensions easing between the US and North Korea.
Chinese president, for his part, urged both countries to restrain from activities that would raise geo-political temperature.
Weak US inflation numbers tamped down fears that the US Fed would rush into policy tightening any time in the near future, traders said.
The 30-share Sensex after opening higher settled up 235.44 points, or 0.75 per cent, at 31,449.03. The gauge had lost 1,111.82 points in the last five days.
The 50-share Nifty bounced 83.35 points, or 0.86 per cent, to 9,794.15 at the close.
Stock exchanges will remain closed on Tuesday for Independence Day.
"Slight ease in tensions between North Korea and the US excited the market. Mid and small cap outperformed the market as participants used the bargaining opportunity. Weak US inflation data may influence the Fed to hold its dovish tone, which eventually adds positive vibes to the emerging markets like India," said Vinod Nair, Head of Research, Geojit Financial Services.
Broader markets such as mid and small cap indices beat the flagship counterparts by a mile, jumping by up to 2.49 per cent.
Asia ended firm and European shares opened in the positive zone, relieved that there is lowering of exchange of threats over North Korea's missile programme.
According to analysts, the likely delay in US rate hike is positive for emerging markets, especially India, triggering a fresh round of purchase by retail and institutional investors looking for higher returns.