Besides, the positive trends in Asian bourses prompted investors to buy into capital goods, realty and banking stocks.
The 30-share Sensex ended the day at 15,185.32, a rise of 296.07 points, or 1.99 per cent, over the previous close. The index moved in a range of 15,225.81 and 15,009.48 points.
The BSE barometer had lost nearly 875 points in the last three days on selling pressure due to rise in crude prices and inflationary concerns. The S&P CNX Nifty of the National Stock Exchange (NSE) also rose by 73.80 points, or 1.66 per cent, to 4,523.60.
Most of the Asian indices ended in the green on Wednesday, impacting positively on the local bourses. European markets showed mixed pattern of trading with positive bias.
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Capital goods stocks hogged the limelight with the sectoral index gaining the most by 283.92 points at 11,901.49. Banking shares were also in keen demand in anticipation of central bank tightening its monetary policy in the near future to check spiralling inflation.
The country's largest drug maker, Ranbaxy Lab ended flat on alternate bouts of buying and selling after moving in a range of Rs 565 and Rs 592.70 before concluding the day at Rs 560.80 on news that Japanese pharmaceutical major Daiichi-Sankyo will acquire a majority stake in the company.