The broader NSE Nifty was also trading above the crucial 7,000-mark.
Besides, covering-up of short positions by speculators also supported the recovery.
The 30-share index rebounded by 164.44 points or 0.71 per cent to quote above the 23,000-mark at 23,116.27 with sectoral indices led by IT, teck and FMCG, trading back in positive zone, rising by up to 0.76 per cent.
The gauge has lost 1,665.14 points in the previous four straight sessions, including 807 points yesterday, on persistent foreign fund outflows due to mounting bad loans and concerns over a slowing global economy.
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Brokers said value-buying in select blue-chips after recent losses coupled with covering of short positions by speculators helped markets' mood to improve, to some extent.
Sustained capital outflows by foreign funds and a weak trend at other Asian markets and overnight losses at the US markets on worries about the global economy, however, capped the gains.
Among Asian markets, Hong Kong's Hang Seng was down by 1.44 per cent while Japan's Nikkei plunged 5.34 per cent in early trade.
The US Dow Jones Industrial Average ended 1.60 per cent lower yesterday.