The benchmark KOSPI rose 1.76 percent to close at 5,768.01, after opening 3.17 percent lower at 5,488.41. The index reversed its early losses and finished at its intraday high.
Institutional investors bought 575.6 billion won (US$432.3 million) worth of shares, while retail investors sold 1.11 trillion won worth of shares. Foreign investors followed the retail investors and offloaded 18.7 billion won.
The rebound came despite steep losses on Wall Street last Friday, when concerns over the profitability of massive artificial intelligence (AI)-related investment weighed on technology shares.
The Nasdaq Composite fell 2.15 percent Friday, while the Philadelphia Semiconductor Index extended its losing streak to eight sessions, putting additional pressure on Asian chipmakers.
South Korean stocks, however, attracted bargain hunters after the KOSPI plunged more than 14 percent last week.
Throughout the session, Samsung Electronics gained 1.86 percent to 219,500 won, while SK hynix rose 1.1 percent to 1,286,000 won, as investors returned to semiconductor shares following last week's sharp selloff.
The relatively modest gains in the country's two largest memory chipmakers, compared with battery and biotechnology stocks, appeared to reflect lingering uncertainty over AI spending and whether heavy investment in data centers would generate sufficient returns.
Investors are also watching upcoming earnings from major U.S. technology companies for signs of sustained AI capital expenditure and stronger cash flow.
Battery makers led the broader recovery, with Samsung SDI surging 10.75 percent to 587,000 won and LG Energy Solution jumping 5.96 percent to 427,000 won.
The rally came amid expectations that South Korean battery manufacturers might have a shot at growing demand for energy storage systems (ESS) in the U.S.
A Taiwanese technology publication reported that Chinese energy storage companies were pulling back from the U.S. market because mounting regulatory restrictions and tariffs, potentially creating opportunities for South Korean suppliers.
Biotechnology shares also posted strong gains. Samsung Biologics surged 7.78 percent to 1,399,000 won, while Celltrion advanced 1.6 percent to 197,000 won.
Elsewhere on the KOSPI, Hyundai Motor climbed 3.85 percent to 324,000 won, while Doosan Enerbility gained 2.94 percent to 66,500 won. Samsung Electro-Mechanics bucked the broader advance, slipping 0.08 percent to 1,187,000 won.
Following the recovery of KOSPI, the tech-heavy KOSDAQ also rose 1.78 percent, to finish at 808.89, recovering the 800-point mark after opening sharply lower at 773.06. The index reached an intraday high of 808.92.
Retail investors bought 64.7 billion won worth of shares, as institutions followed with the purchase of 69.2 billion won. Foreign investors sold a net 148.2 billion won.
Battery-related stocks also pushed gains on the KOSDAQ, with EcoPro surging 10.1 percent to 89,500 won and EcoPro BM jumping 7.4 percent to 114,800 won. Biotechnology shares joined the rally. HLB gained 2.9 percent to 42,850 won, while Alteogen rose 1.92 percent to 238,500 won.
Jusung Engineering advanced 1 percent to 212,500 won, while Curiox Biosystems edged up 0.4 percent to 68,300 won.
By contrast, semiconductor-related stocks remained under pressure. Leeno Industrial slipped 0.9 percent to 70,200 won, while FADU fell 2.8 percent to 55,600 won and Doosan Tesna declined 2.62 percent to 111,500 won.
Throughout the Asia, China's Shanghai Composite gained 0.4 percent to 3,730.9, while Hong Kong's Hang Seng Index rose 0.52 percent to 24,186.8. Japan's Nikkei 225 moved in the opposite direction, falling 0.6 percent to 64,916.7.
The South Korean won strengthened 0.48 percent to 1,331.6 won per dollar.
Oil prices retreated, giving back some of last week's gains despite continuing supply concerns stemming from conflicts in the Middle East and Eastern Europe.
West Texas Intermediate crude fell 1.79 percent to $99.62 a barrel, while Brent crude dropped 2.42 percent to $107.18.
The decline came even as tensions remained elevated around the Strait of Hormuz, where three oil tankers were reportedly damaged over the weekend. Ukrainian drone attacks on Russian oil facilities also raised concerns over potential supply disruptions.
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