The 30-share barometer, which had lost 202.63 points in yesterday's trading on inflation concerns, rebounded by 124.20 points, or 0.74 per cent, to 16,802.08.
All sectoral indices, led by banking, realty and oil and gas, rose by up to 1.05 per cent.
Similarly, the wide-based National Stock Exchange index Nifty, was trading 38.10 points, or 0.75 per cent, higher at 5,092.85.
Brokers said buying by funds and retail investors, triggered by a firm trend on Asian bourses in line with gains at the US market on speculation of more economy-boosting stimulus measures from the Federal Reserve, helped trading sentiment to improve.
In the Asian region, Japan's Nikkei was up by 0.31 per cent, while Hong Kong's Hang Seng index gained 0.81 per cent in early trade. The US Dow Jones Industrial Average ended 1.24 per cent higher in yesterday's trade.
