The benchmark BSE Sensex rebounded over 278 points to 27,791.10 in early trade on 13 August, reversing its fall for the last four sessions after retail inflation eased in July, raising hopes of a rate cut by the Reserve Bank.
Industrial output too cheered, which expanded at a 4-month high of 3.8 per cent in June.
Besides, a firming trend at other Asian markets buoyed sentiment.
The 30-share barometer recovered sharply 278.84 points,or 1.01 per cent, to 27,791.10, with all sectoral indices led by realty, consumer durables, banking and capital goods trading in the positive terrain with gains up to 1.98 per cent.
The gauge had tumbled 785.87 points in previous four straight sessions on yuan woes with the rupee plunging to a nearly 2-year low and uncertainty over the fate of a key GST bill.
The NSE index Nifty recaptured the 8,400-level by recovering 70.80 points, or 0.85 per cent, to 8,420.25.
Brokers said buying activity picked up on positive economic data as retail inflation fell to 3.78 per cent in July.
Among other Asian markets, Hong Kong's Hang Seng was up 0.24 per cent while Japan's Nikkei was trading 0.80 per cent higher in early trade.
The US Dow Jones Industrial Average ended almost flat in yesterday's trade.