Banks were the star performers of the day with ICICI Bank surging more than 5%, Axis Bank gaining more than 4.3% and State Bank of India rising 5.4%. PSU banks rallied along with other private sector banks with Allahabad bank, Andhra Bank, Bank of Baroda, Bank of India and Canara Bank all gaining between 4-8%.

Metal stocks too also saw a sharp surge in prices with Sterlite Industries, Sesa Goa, Jindal Steel and Tata Steel seeing huge spike in their share prices.

Shares of retailing companies were also in the limelight with Pantaloon Retail jumping more than 20%, Shopper's Stop gaining 8% and Provogue jumping more than 13%. The Union Government on Friday had cleared a proposal for FDI in multi-brand retail, which is why there was large scale buying in retail stocks.

Aviation shares too jumped following the government's decision to allow FDI in the aviation sector. Spice Jet rallied more than 13% and Kingfisher jumped 20%.

With the monetary policy now behind there are not too many domestic cues. Markets would look to reforms to be unleashed by Finance Minister P Chidambaram from time to time.

All eyes would now be on the second quarter results to be declared by companies in September. Markets are also expected to track global events, particularly developments in Europe.

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