Indian equity benchmarks began the week with a bang tracking gains across global shares as the Federal Reserve Chairman struck a more dovish tone than some investors had expected in his Jackson Hole speech. Both indices Sensex and Nifty50 soared to all-time highs during the session, helped by gains across most sectors led by financial, auto, metal and pharma stocks.

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The 30-scrip index rose 765.04 points or 1.36 percent to end at 56,889.76, and the broader Nifty50 gauge climbed up 225.85 points or 1.35 percent to settle at 16,931.05 -- both record closing highs. The 50-strong Nifty50 index rose for the sixth session in a row.

Among blue-chip stocks, Bharti Airtel, Divi's Labs, Axis Bank, Tata Steel, Coal India, Titan and ONGC -- ending between 2.96 percent and 5.02 percent higher -- were the top gainers. On the other hand, Tech Mahindra, Nestle and Eicher Motors -- closing between 1.11 percent and 1.43 percent lower -- were the worst hit among the seven laggards in the Nifty50 universe.

Reliance Industries, ICICI Bank and Axis Bank were the biggest boosts for Sensex.

Speaking at the annual Jackson Hole symposium over the weekend, Jerome Powell stuck with a wait-and-see approach on the US economy, cementing hope that its ultra supportive money policy will continue this year with a smaller rate of tapering.

"Global markets strengthened as the anxiety over the Jackson Hole symposium subsided following the dovish tone of the Fed Chair," said Vinod Nair, Head of Research at Kochi-based brokerage Geojit Financial Services.

Investors had been waiting to see whether the Fed Chair would give a clear indication of his views on timing of the US central bank's tapering of asset purchases or hiking interest rates to start removing monetary stimulus.

Analysts awaited official data on India's gross domestic product (GDP) due on Tuesday for domestic cues.

Bharti Airtel shares were in high demand, a day after the private sector telecom major's board approved fundraising up to Rs 21,000 crore through a sale of shares to existing shareholders, as it builds a war chest to prepare for the launch of 5G services. Positive commentary from the Bharti Airtel management also boosted investors' sentiment. (Also read: Rights issue unlikely to impact Airtel stock negatively, says Axis Securities)

All 12 constituents of the Nifty Bank index finished higher, helping the sectoral gauge close 2.02 percent higher. Shares in state-run SBI rose 2.53 percent, while those of its private sector counterparts ICICI Bank and HDFC Bank gained 2.04 percent and 1.33 percent respectively.

The Nifty Auto index rose 1.68 percent, ahead of the monthly sales report by automakers. Maruti Suzuki (closing 2.67 percent), Mahindra & Mahindra (2.24 percent) and Tata Motors (2.10 percent) were among the top gainers.

Some selling pressure was seen in select IT shares, keeping the upside in check. The Nifty IT index ended 0.58 percent lower, as the rupee hit a two-month high against the US dollar. Strength in the rupee against the greenback affects the profitability of exporters such as IT companies.

Broader markets outperformed the headline indices, as the midcap and smallcap gauges jumped 1.94 percent and 1.53 percent respectively.

In broader markets, IndiaMart, Polycab, Dalmia Bharat, IEX and Can Fin Homes -- rising between 7.33 percent and 12.02 percent -- were the top gainers. On the flipside, Fortis, Endurance, L&T Tech Services, Century Plyboard and Thyrocare, closing with cuts of between 1.44 percent and 3.53 percent, were the top losers.

Overall market breadth was in favour of the bulls with an advance-decline ratio of 2:1, as 2,222 stocks rose on BSE against 1,096 that fell.

Globally, European shares held firm near record highs scaled earlier this month, as hopes that continued central bank support would sustain an economic recovery offset woes over rising cases of the Delta variant of Covid-19. The Europe-wide STOXX 600 traded flat but was on course to end August more than 2 percent higher -- its seventh straight month of gains. Earlier, Asian markets gained modestly.