Gains tracked strong Japanese equities which scaled a near five-year peak after the Standard & Poor's 500 Index closed at a record high overnight on renewed hopes of a steady U.S. recovery.
Foreign institutional investors were net buyers of Rs 897 crore of stocks on Monday, taking the 2013 net buying to a total of $12.17 billion, provisional exchange data showed.
Some market analysts like Sarvendra Srivastava are optimistic that the current rally will drive the Nifty to fresh highs for 2013.
Metal and IT stocks, which have seen sustained buying over the last few sessions, witnessed choppiness today. However, banking stocks recovered, helping sentiments on the Street.
High beta realty shares and defensives such as FMCG and Healthcare shares rose over 1 per cent.
35 stocks traded higher on the Nifty, led by realty major DLF, which has finalised eight merchant bankers to sell up to 81 million shares. DLF was up 2.3 per cent.
Tobacco major ITC, an index heavyweight, rose 2 per cent, while private lender IndusInd Bank advanced 1.8 per cent.
Coal India was the top Nifty loser, down 2.4 per cent, while utility vehicle maker M&M traded 0.9 per cent lower. Cement stocks extended losses for a third straight session after weak Q4 earnings.
Reliance Communications shares saw profit taking after hitting a near 2-year high on Monday. The stock traded 0.5 per cent lower at Rs 112.20. Jain Irrigation traded 2.7 per cent higher after an upgrade to "outperform" by investment bank Morgan Stanly.
GlaxoSmithKline Pharmaceuticals gained as much as 7 per cent ahead of its January-March earnings later in the day.
The Sensex was up 106 points or 0.53 per cent higher at 19,779, while the Nifty advanced 33 points to 6,005. The rupee, however, slipped against the dollar to 54.17.
(With inputs from agencies)