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BENGALURU  - Indian shares rose on Monday to close at a near three-month high, buoyed by a surge in India's largest private lender HDFC Bank and mortgage lender Housing Development Finance Corp after the companies said they were merging in a $40 billion deal.

The NSE Nifty 50 index closed 2.2% higher at 18,053.40, and the S&P BSE Sensex rose 2.25% to 60,611.74.

HDFC Ltd gained 9.3%, hitting its highest since late November, while HDFC Bank rose about 10% to a level not seen since mid-October.

The Nifty bank index rose 4% and the finance index surged 4.6%.

The market movement is largely due to the "unexpected announcement" of the merger, said Saurabh Jain, assistant vice president at SMC Securities.

"This is a very positive news in the sense the foreign institutional investors holding will increase after the merger," Jain said.

Both HDFC and HDFC Bank were major laggards last year, gaining 1.1% and 3%, respectively, compared with a 13.5% rise in the Nifty bank index.

Shares of Adani Ports and Special Economic Zone rose 4.2% after it reported strong March business operations.

Indian sugar stocks gained up to 4.5% on export deals.

Shares of commercial vehicles maker SML Isuzu soared 20% after a strong March sales update and a hike in vehicle prices.

Market participants will be closely watching the monetary policy decision by the country's central bank on Friday.

Meanwhile, global share markets were mixed on Monday amid talks of yet more sanctions against Russia over its invasion of Ukraine. [MKTS/GLOB]