The blue-chip NSE Nifty 50 index ended up 1.07% at 18,003.30, levels it last scaled in mid-November, while the benchmark S&P BSE Sensex closed 1.09% higher at 60,395.63. Both indexes logged their eighth session of gains in eleven.

All major Nifty sub-indexes settled higher, with the PSU Banks index advancing the most with a 3.2% gain. Nifty's Auto index added nearly 2%, led by 3.2% jump in two-wheeler maker Hero MotoCorp.

The Nifty IT index index closed up 0.2%, as investors turned their focus to top companies in the sector kicking off third-quarter corporate earnings on Jan 12.

Tata Consultancy Services rose more than 3% after the software heavyweight said it plans to consider a share buyback.

"The market expects Q3 results starting this week to be very good, particularly for IT and financials," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

The Nifty realty index closed 1.9% higher, led by a 11.5% surge in Sunteck Realty after it logged sequential growth in quarterly pre-sales numbers.

Among losers, Paytm shares settled 6% lower after brokerage Macquarie cut its target price on the digital payments firm to 900 rupees per share from 1,200 rupees per share.

Meanwhile, India on Monday recorded 179,723 fresh COVID-19 infections and the country started administering booster vaccine doses to frontline workers and vulnerable elderly people to combat the fast-spreading Omicron variant.

Surging COVID-19 cases are being ignored by markets globally as Omicron, though fast-spreading, is not virulent and hospitalization cases are very low, Vijayakumar said.

(Reporting by Shivani Singh in Bengaluru; editing by Uttaresh.V, Subhranshu Sahu and Ramakrishnan M.)