Equity benchmarks mustered gains for the first time this week on Thursday as investors piled into the recently-battered metal, bank and IT stocks amid expiry of monthly derivative contracts.
Snapping its three-session losing streak, the 30-share BSE Sensex rallied 503.27 points or 0.94 per cent to settle at 54,252.53.
On similar lines, the broader NSE Nifty gained 144.35 points or 0.90 per cent to end at 16,170.15.
Tata Steel topped the Sensex gainers' chart, rallying 5.27 per cent after its recent rout, followed by SBI, HDFC Bank, Axis Bank, Nestle India, HDFC, ICICI Bank, TCS and Wipro.
In value terms, HDFC twins and ICICI Bank accounted for over half of the benchmark's gains.
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In contrast, Sun Pharma, Reliance Industries, Hindustan Unilever, Larsen & Toubro, Dr Reddy's and Bajaj Finance were the laggards, losing up to 1.16 per cent.
The market breadth was in favour of the bulls, with 24 of the 30 Sensex stocks closing in the green.
"Markets witnessed healthy short covering towards the closing hours that helped key indices to reverse the 3-day losing streak. With the US FOMC minutes out of the way now, market is more or less getting prepared for the likely rate hikes, and hence we saw strong buying on the futures and options (F&O) expiry day.
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"While we may see bouts of selling going ahead due to other negative factors like higher inflation, continuous FII selling, and Russia-Ukraine conflict, relief rallies will still be seen amidst volatility," said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd.
Vinod Nair, Head of Research at Geojit Financial Services, said after the heavy sell-off recently, market showed signs of exhaustion and can rebound for the short to medium-term.
"Technically, the broad market is in the oversold territory and fundamentally valuations are just below the three-year average. A key reason for the current correction is selling by FIIs and a reduction in domestic buying. A drop in FIIs selling will be an important reason for the bounce.
"For this, the actions to be undertaken by Fed and RBI in June will be an important factor. Moreover, we should note that the fiscal measure announced by the Indian government to control inflation is positive for the domestic market," he added.
In the broader market, the BSE midcap gauge spurted 1.44 per cent while the smallcap index jumped 0.78 per cent.
Among BSE sectoral indices, metal gained the most at 3.35 per cent, followed by bank (2.15 per cent), finance (1.97 per cent), basic materials (1.76 per cent) and realty (1.43 per cent). FMCG ended marginally lower.
World markets were largely positive even as the latest US Federal Reserve minutes confirmed its policy tightening stance.
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Elsewhere in Asia, markets in Shanghai settled in the green while, Hong Kong, Seoul and Tokyo ended marginally lower.
Bourses in Europe were trading in the positive zone in the afternoon trade. Stock markets in the US had ended higher on Wednesday.
International oil benchmark Brent crude jumped 0.54 per cent to USD 114.7 per barrel.
The rupee declined 2 paise to close at 77.57 (provisional) against the US dollar on Thursday, as firm crude prices and relentless foreign capital outflows dented investor sentiment.
Continuing their selling spree, foreign institutional investors offloaded shares worth a net Rs 1,803.06 crore on Wednesday, as per stock exchange data.
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