Foreign institutional investors bought a net of about $1.5 billion on Friday, according to exchange data, their first purchase after 11 consecutive sessions of selling.
Asian stocks rose on Monday, following fresh gains on Wall Street, while the euro wallowed near 28-month lows versus the dollar on nervousness before a vote in the Greek parliament that could result in snap elections.
However, trading volume remained low as investors stayed on the sidelines given that most global markets will have a shorter trading week.
"We expect markets to trade rangebound for the time being. A lot of hopes have built in around the budget part. We are positive on the market, but things will start really moving only in the second half of 2015," said Daljeet S Kohli, head of research at IndiaNivesh.
The benchmark BSE Sensex was 0.8 percent higher at 27,460.02, while the broader Nifty was up 0.78 percent at 8,264.55.
Metals stocks led gains with Tata Steel (TISC.NS) adding 2.6 percent and Hindalco Industries (HALC.NS) gaining 2.3 percent after a local daily reported that the Cabinet was likely to take up the mining ordinance this week.
Among other blue chips, Oil and Natural Gas Corp (ONGC.NS) rose 1.6 percent and Cairn India Ltd (CAIL.NS) added 0.6 percent after oil prices rebounded from recent multi-year lows.
Sesa Sterlite (SESA.NS) was up 4.2 percent after Kotak Securities upgrade the stock to "buy" from "reduce", citing improving fundamentals.
