Mumbai: Benchmark BSE Sensex jumped by nearly 567 points and broader Nifty closed above 25,900 on Monday following a sharp rally in global markets, as softer-than-expected US inflation reignited hopes of Fed rate cuts this year.

The 30-share BSE Sensex jumped 566.96 points or 0.67 per cent to settle at 84,778.84. During the day, it surged 720.2 points or 0.85 per cent to 84,932.08. The 50-share NSE Nifty climbed 170.90 points or 0.66 per cent to 25,966.05. Prospects of a US-China trade deal and fresh foreign fund inflows also added to the markets' optimism, analysts said.

Among Sensex firms, Bharti Airtel, Reliance Industries, Eternal, State Bank of India, Tata Steel and HDFC Bank were the major gainers. However, Kotak Mahindra Bank fell the most by 1.74 per cent after its September quarter results. The private lender reported an 11 per cent decline in consolidated net profit for the September quarter. Bharat Electronics, Infosys and Bajaj Finance were also among the laggards. PSU banks index outperformed, rallying 2.76 per cent, whereas defence and media shares fell due to profit booking. "The domestic market witnessed a broad-based recovery owing to progress in the US-China trade talks. Softer-than-expected US CPI data renewed expectations of a FED rate cut this week, boosting investor confidence. Easing global headwinds, coupled with strong domestic reforms, provided cues for domestic earnings growth and justified the current premium valuations," Vinod Nair, Head of Research, Geojit Investments Limited, said.