The 30-share BSE index, which had lost 318.23 points in the previous two sessions, recovered 171.38 points, or 0.47 per cent, to 36,136.40.
Similarly, the NSE Nifty moved up 49.70 points, or 0.45 per cent, to 11,077.40.
Fresh positions created by retail and domestic institutional investors on hopes of an investor-friendly and growth-oriented budget lifted the sentiment, brokers said.
Besides, positive leads from other Asian markets, tracking overnight gains on the Wall Street following the Federal Reserve's decision to keep rates unchanged, influenced sentiments here, they said.
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On the macro front, growth of the eight core sectors slowed to a five-month low of 4 per cent in December 2017 due to negative performance of segments like coal and crude oil, official data showed yesterday.
In Asian trade, Hong Kong's Hang Seng was up 0.24 per cent while Japan's Nikkei edged higher by 1.28 per cent in early trade today. Shanghai Composite Index, however, shed 0.97 per cent.
The US Dow Jones Industrial Average closed 0.28 per cent higher yesterday.