Indian equity benchmarks rebounded on Monday, following two days of losses, tracking mild gains in global markets. Strong buying interest in IT and oil & gas shares along with gains in heavyweights such as HDFC Bank and Reliance Industries pushed the market higher. However selling pressure in automobile and PSU bank stocks limited the upside.

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The S&P BSE Sensex index ended 226.47 points or 0.41 percent higher at 55,555.79, and the broader NSE Nifty50 benchmark settled at 16,496.45, up 45.95 points or 0.28 percent.

During the session, which began with a steep gap-up opening tracking gains in global peers, the 30-scrip index came within 337.4 points (0.60 percent) of an all-time high registered last week. Nifty climbed to as high as

16,592.50, 109.35 points off its intraday record.

Among blue-chip stocks, HCL Tech, TCS, Nestle, Bajaj Finserv, ONGC, Bharti Airtel and Wipro, closing between 1.35 percent and 4.26 percent higher, were the top gainers.

On the other hand, Grasim, Adani Ports, Mahindra & Mahindra, Eicher Motors, Bajaj Auto and Tata Motors, down between 2.17 percent and 3.14 percent, were the worst hit among the 27 laggards in the Nifty50 universe.

TCS, HCL Tech and Reliance Industries were the top boosts for Sensex.

Broader markets underperformed the headline indices, with the Nifty Midcap 100 and Smallcap 100 indices closing 0.77 percent and 1.77 percent lower respectively.

Escorts, Adani Total, Mindtree, Welspun and Bajaj Electricals were among the top gainers in the segment. On the other hand, AB Capital, Laurus, JSW Energy, Caplin Point and Hindustan Copper were some of the the top losers.

"Heavy selling continued in small- and mid-cap stocks... The key factor for the correction is the good performance during 2020-21 leading to peak valuations while liquidity is expected to normalise in the future. The ongoing correction will provide an opportunity for long-term investors to re-enter quality stocks," said Vinod Nair, Head of Research at Geojit Financial Services.

Reliance Industries rose 0.75 percent, after regulator TRAI's data showed the conglomerate's telecom arm, Reliance Jio, added 54.6 lakh users in June in the country's fiercely-competitive telecom market.

Bharti Airtel shares jumped 1.57 percent. The telecom operator added 38.1 lakh customers to its network in June.

Auto stocks were under selling pressure as the sector continued to struggle against a global shortage of semiconductor chips. Maruti Suzuki declined 0.30 percent, Tata Motors 2.21 percent and M&M 2.5 percent.

Overall market breadth remained in favour of bears, with an advance-decline ratio of 1:3 as 777 on BSE closed higher while 2,470 moved lower.

European stock markets began the day on a strong note, following Asian peers. The United Kingdom's FTSE benchmark was up 0.41 percent in early deals, while France's CAC and Germany's DAX indices were up 0.71 percent and 0.16 percent respectively.