The benchmark Sensex today bounced back by over 195 points to close above the 26,000-level at 26.034.13 -- nearly a month high -- on a host of factors, including value buying in beaten-down blue-chips, amid thin year-end trading and a mixed global trend.
The gains were driven by healthcare, auto and banking stocks and came ahead of the derivatives expiry later this week.
The broader NSE Nifty too was back on top of the 7,900-mark.
Mood turned positive following a strong rally on value-buying in battered stocks and covering-up of pending short positions by speculators ahead of the futures and options expiry on Thursday.
A stronger rupee, which flexed its muscles for the eighth straight day against the dollar, and a mixed trend in overseas markets laid the groundwork for the upside.
The volume of business was restricted though, as foreign funds and investors kept their portfolios limited in view of an approaching year-end.
The 30-share BSE barometer stayed in the positive space throughout and closed higher by 195.42 points, or 0.76 per cent, at 26,034.13 -- its highest closing since December 2.
The gauge was down 11.59 points in the previous session on Thursday after an RBI report raised concerns over corporate vulnerability and bad loans of banks.
The market was shut on Friday for Christmas.
The 50-share NSE Nifty also retook the 7,900-level by jumping 64.10 points, or 0.82 per cent, to close at 7,925.15. Intra-day, it touched a high of 7,937.20.
Dr Reddy's led the way in the Sensex pack, surging 3.52 per cent to close at Rs 3,116.35, followed by NTPC (3.38 per cent).
Tata Motors too firmed up 2.84 per cent while Sun Pharma advanced 2.52 per cent.
Shares of RIL ended 0.76 per cent higher at Rs 1,008.55 after its telecom arm Reliance Jio rolled out its 4G network for its employees, in a prelude to a commercial launch next year.
ONGC rose 2.56 per cent, followed by ICICI Bank (2.46 per cent), Lupin (1.98 per cent), Adani Ports (1.16 per cent), Cipla (1.06 per cent) and Maruti Suzuki (0.89 per cent).
However, shares of Tata Steel, Bharti Airtel, M&M, HDFC, BHEL, GAIL and L&T ended up to 3.59 per cent lower.
Sectorally, the BSE healthcare index gained the most by rising 1.34 per cent, followed by auto 0.96 per cent, power 0.93 per cent, banking 0.92 per cent, PSU 0.74 per cent and oil and gas 0.67 per cent.
Broader markets too performed better, with the BSE small-cap index rising 0.47 per cent and mid-cap 0.14 per cent.
The global trend in the rest of Asia remained mixed while European markets were in a better shape in early trade.
Foreign portfolio investors (FPIs) sold shares worth a net Rs 112.03 crore last Thursday, provisional data from the stock exchanges showed.
