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Indian blue-chip shares rebounded from a weak start on Monday, lifted by metal companies on strong China data and block deals in Tata Steel, while small- and mid-cap stocks extended losses on valuation concerns.

The blue-chip NSE Nifty 50 index advanced 0.15% to 22,055.70, while the BSE Sensex added 0.14% to 72,748.42, after shedding about 0.2% each earlier in the session.

Including the day's gains, the Nifty has lost about 2.1% from its all-time high on March 11.

"We see signs of exhaustion in Indian markets," analysts at Phillip Capital said, adding that there could be either a price or time correction across most segments due to stretched valuations.

The broader, more domestically-focussed small- and mid-cap stocks slipped 0.6% and 0.4%, respectively.

They posted their worst week in 15 months on Friday, following a warning from the markets regulator of froth in the segments and stress test results, which indicated wide disparity in how long mutual funds would take to liquidate their portfolios in case of a market decline.

While profit-booking may persist in small- and mid-cap stocks, large-cap stocks are likely to remain resilient, said G Chokkalingam, founder and head of research at Equinomics Research.

Metal stocks climbed 2.5%, led by a 5.65% jump in Tata Steel on multiple block deals executed at a premium.

Gains in the sector were further supported by stronger-than-expected factory output and retail sales data from China, the world's top producer and consumer of metals.

Information technology stocks shed 1.64% ahead of the Federal Reserve's policy decision on Wednesday, which will be monitored for clues on when the central bank will cut rates.

Except Adani Power, all other Adani Group companies fell 0.5%-4.5%, on a report of a U.S. probe into the group and its founder.