The government assurance to take necessary steps to accelerate economic growth and expectations for an interest rate cut along with recovery in rupee fuelled the recovery.
Firm opening in European peers also played a significant role to improve the overall market sentiment.
Earlier in the day, things looked rather bleak as the market opened with a sharp 1 per cent fall on across the board selling. The key index later plunged below the 4,900 level following deteriorating economic situation in Europe amid high volatility due to derivatives contract expiry and announcement of fourth quarter GDP data.
Sentiment also got spooked by the rupee's continuing slide as it hit a new low against the US dollar. It triggered sell-off as investors squared off their long positions.
The market extended losses on the back of weak GDP data, which grew at 5.3 per cent in January-March quarter as against 7.8 per cent in the same same last year.
However, the late afternoon session saw the downslide getting stabilised and the market showed some signs of recovery on low-level buying.
More From This Section
Financial, auto, FMCG, metal, capital goods and tech scrips witnessed brisk selling. The 50-share index hit a high of 4,949.25 and a low of 4,883.55 before ending at 4,924.25, a fall of 26.50 points, or 0.54 per cent, over the last close.
Maruti, ICICI Bank, Tata Motors, Jindal Steel, Bank of Baroda, Axis Bank, Sun Pharma, Grasim, ACC and SBIN were top losers from the Nifty pack. Asian Paints, IDFC, SAIL, PNB, JP Associates, Hindlcao, Kotak Bank, BPCL, RIL and Infy gained.
Turnover in cash segment shot up to Rs 16,178.35 crore from Rs 9,062.29 crore yesterday. In all, 5,471.43 lakh shares changed hands in 50,32,004 trades. Market capitalisation stood at Rs 56,99,468 crore.