The splendid show was primarily driven by bargain hunting in beaten-down stocks, including Sun Pharma, up 3.35 per cent.
"Indian stocks swung back as yesterday's falls were deemed overdone, and investors hunted for value amid the price falls. It also helped that proposal to amend the Land Bill so as to give more flexibility to states was seen favourably," said Anand James, Co Head Technical Research Desk, Geojit BNP Paribas.
Fresh buying, especially in refinery, banking, auto, power and metal provided further momentum.
The 30-share Sensex took some early blows mainly due to initial selling, but quickly shaped up before settling the day at 28,504.93, up 322.79 points, or 1.15 per cent.
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It had lost 281.17 points, or 0.99 per cent, in the past two days.
The closing for both the benchmark indices is the highest since April 16.
Of the 30 constituents, 22 ended with gains.
Reliance Industries was the top gainer (4.26 per cent) while M&M, Sun Pharma, Bajaj Auto and HDFC too advanced.