Markets ended in the green after surging in late-noon trades.
Heavy buying in Reliance and Bharti Airtel buoyed the BSE benchmark index to a high of 18,932.
The index finally ended at 18,871-- up 149 points.
Nifty ended up 46 points at 5,680.
Reliance edged up 1 per cent to Rs 88 after the government approved the BP deal.
The Centre on Friday gave an unconditional approval to the India's biggest private sector company, to sell 30 per cent interest in 21 blocks to British Petroleum.
The government, however, withheld permission for another two blocks.
Meanwhile, the company is scheduled to announce its June quarter results on Monday.
Asian bourses slipped on Monday as debt worries continued to plague investor sentiments in the US.
US leaders failed over the weekend to agree to raise the nation's debt ceiling ahead of a deadline on August 2,2011, giving rise to fears of a sovereign default.
The global financial crisis, which was rooted in poor regulation of the US housing and banking sectors, already tarnished perceptions of the United States overseas.
Shanghai Composite slumped 3 per cent to 2,688. Nikkei and Hang Seng declined nearly 1 per cent each.
Bank of India posted a 28 per cent decline in net profit at Rs 517.5 crore for the first quarter ended June 30, 2011.
The state-owned bank had posted a net profit of Rs 725.1 crore for the corresponding quarter of the last fiscal.
The stock shed 3 per cent at Rs 404.
However, the total income of the bank during the period increased by 34.8 per cent at Rs 7,293.6 crore as compared to Rs 5,407.6 crore during the year-ago period.
Shares of leading mobile service providers jumped after top mobile firm Bharti Airtel raised call tariffs in some of its telecom zones, triggering expectations that other firms will follow suit in a market that has one of the world's cheapest call rates.
Religare upgraded Bharti and smaller rival Idea Cellular to 'buy' from 'hold' and raised its outlook for the Indian telecoms sector to 'overweight' from 'neutral'.
Both stocks hit a new high on Monday. Bharti Airtel was the biggest contributor to the Sensex's upmove.
"Idea and Bhart Airtel are in uptrends. RCom is still in downtrend. Investors can hold on to Idea and Bharti, but RCOM may continue downwards," said Hormuz Maloo, technical analyst, Geojit BNP Paribas Securities.
Software firm Patni Computers on Monday posted a net profit of Rs 82.03 crore in the quarter ended June 2011, down 46.38 per cent from Rs 153 crore in the corresponding quarter a year ago.
Shares of Patni touched a new 52-week low of Rs 306 on Monday and finally ended down 3.2 per cent at Rs 322.
Realty stocks were soft on worries that RBI may raise key lending rates once again in its policy review on Tuesday.
BSE IT and FMCG indices were down in trades.
Meanwhile, rainfall between July 14 and July 20 was 7 per cent above the long-term average, according to the India Meteorological Department.
This comes after two successive weeks of below-average rains that raised concerns about crops.
Markets will look at the RBI policy review and the ongoing results season for direction. BHEL, Maruti Suzuki, Great Offshore and Asian Paints to announce quarterly results on Tuesday.
The next set of numbers would come from Bank of Baroda, IDFC, Lupin and Oil India.
The BSE market breadth was positive.
Out of 3,004 stocks traded, 1,605 advanced while 1,277 declined.
