Indian shares extended their gains on Monday as fears of aggressive US Federal Reserve rate hikes eased and oil prices slipped. The Sensex and Nifty rose for a second straight session, building on Friday's strong rally. Investors took comfort from softer US economic data, which reduced expectations of further Fed tightening.

A decline in crude oil prices also helped sentiment, easing concerns about India's import bill and inflation. Banking and IT stocks led the advance, while broader markets participated in the rebound. Analysts said the relief rally could continue if global cues remain supportive, though they cautioned that volatility may persist around the RBI policy decision due October 7 and the start of the September-quarter earnings season.

Foreign investors, who pulled money out in September, will be watched for signs of returning. The rally was broad-based, with midcap and smallcap indices also posting gains. Analysts advised investors to remain selective and focus on quality stocks with strong fundamentals.