Equity benchmarks were trading at high points of the day, with the Sensex gaining almost 200 points intraday, while the Nifty was higher by around 60 points.
The rupee firmed up 8 paise to 65.02 against the dollar on Monday, set off by fresh selling of the US currency by exporters and banks.
The local unit received some good support from higher domestic equities but a strong dollar overseas kept it in check.
The move raised questions on whether the shallow correction was past. “The current market has nothing to do with fundamentals, valuations or even earnings. It is a pure liquidity play,” Ajay Srivastava, CEO, Dimensions Corporate Finance Services told CNBC-TV18 in an interview.