Stocks kicked off the week on a cheerful note with the benchmark Sensex rallying almost 592 points amid optimism over potential rate cuts by the Reserve Bank of India (RBI) and expectations of a limited impact of the stimulus measures announced by China over the weekend.

The 30-share barometer gained 591.69 points or 0.73 per cent to close at 81973.05 after surging 690.81 points to hit an intra-day high of 82072.17. At the NSE, the Nifty rose 163.70 points to end above the 25000 mark at 25127.95.

Market experts attributed the jump in stock prices to expectations that the RBI is likely to reduce borrowing costs in December, before which the US Federal Reserve could resort to another cut of at least 25 basis points.

However, analysts cautioned that the gains should not be taken for granted as the West Asian tensions continue to linger and foreign investors remain sellers. Provisional data from the stock exchanges showed them offloading stocks worth ₹4,163 crore on Monday.

“A sharp fall in crude oil prices provided a major impetus to the markets, as markets ended in positive territory led by gains in banking, IT and realty stocks,” Prashanth Tapse, senior VP (research), Mehta Equities Ltd, said.

“The recovery may not fuel strong bullish sentiment, as FIIs deserting Indian markets this month coupled with lingering West Asia conflict has created a lot of uncertainty among the investors,” Tapse said.

At the forex markets, the rupee closed flat at 84.06 against the dollar after a rangebound session. Last Friday, the domestic currency had fallen below the 84 level for the first time.

“The rupee’s weakness is primarily driven by FII selling as investors pull out funds to sit on cash. The expected range for the Indian currency is between 83.90 and 84.25,” Jateen Trivedi of LKP Securities said.