The BSE benchmark index, which had lost 45 points in the previous session, dropped by over 75 points in choppy trade earlier today but bounced back in the last two hours to close 56.47 points higher, or 0.32 per cent at 17,440.87.
Traders said the 30-share Sensex recovered as Reliance Industries wiped off two days of losses to close today 1.87 per cent higher. State Bank of India that gained 1.25 per cent and ICICI Bank which gained one per cent provided support, they added.
GAIL, Jindal Steel, Tata Motors and Tata Steel rose between 1.4-2.6 per cent each. Trading sentiment further bolstered on reports the government is planning to take steps to accelerate GDP growth.
Although global slowdown is affecting India, the fundamentals of its economy are strong and the government is taking a series of steps to see it moves to a higher growth trajectory, Cabinet Secretary Ajit Kumar Seth said in Delhi.
The 50-share National Stock Exchange index Nifty rose by 20.25 points, or 0.39 per cent to 5,274, after dipping to the day's low of 5,233.20.
Meanwhile, with the storm over coal block allocation issue refusing to subside, Parliament was paralysed for the tenth day today as BJP remained unrelenting on its demand for resignation of Prime Minister Manmohan Singh.
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In Asia, barring Taiwan, indices of major countries were down. Europe was also trading weak in afternoon deals.
The realty sector index gained the most by rising 1.59 per cent, followed by oil and gas index that gained 1.19 per cent. The power index rose by 0.92 per cent while the consumer durables inched up 0.89 per cent.