India's benchmark BSE Sensex index gains 0.6 percent, while the broader NSE Nifty index is up 0.71 percent, extending gains after an HSBC survey showed Indian manufacturing returned to growth last month as a strong rise in orders pushed factories to step up production.
Steel shares gain, Tata Steel Ltd up 2.1 percent while Jindal Steel and Power Ltd up 4.2 percent, also benefitting after China's factory activity maintained steady growth momentum in November.
Financial shares lead the gains with IDFC Ltd rising 2.9 percent on continued hopes it would get a banking licence. Axis Bank Ltd gains 2.4 percent ahead of inclusion in India's benchmark BSE index on Dec. 23.
Larsen and Toubro Ltd gains 1.4 percent after the company said on Friday it was evaluating options "for monetisation" of assets belonging to unit L&T Infrastructure Development Projects Ltd (IDPL).
Indian Oil Corp Ltd gains 1 percent after the company said on Saturday it would raise retail prices for diesel by 1 percent, or 0.57 rupees (1 cent), from Sunday in line with a plan to gradually align them with international prices.
Hindustan Petroleum Corp and Bharat Petroleum Corp also gain 1 percent each.