The benchmark BSE Sensex recovered sharply over 213 points in early trade today powered by capital inflows by foreign funds and buying by retail investors amid a strong Asian trend.
Besides, better-than-expected Q1 earnings by Bharti Airtel buoyed sentiment.
The 30-share index, which had lost 115.13 points in the previous volatile session, gained back 213.52 points, or 0.76 per cent, to 28,285.45.
All sectoral indices led by metal, IT and realty were in the positive zone, rising up to 1.73 per cent.
The NSE Nifty too climbed 62.55 points, or 0.73 per cent, to 8,579.45.
Brokers said emergence of buying in blue-chips on a solid earnings show by Bharti Airtel after yesterday's fall amid a firming Asian trend mainly got the momentum back.
Bharti Airtel was trading 2.88 per cent higher at Rs 425.60 after the company yesterday reported about a 40 per cent jump in consolidated net profit at Rs 1,554.3 crore in the first quarter of the current fiscal.
Meanwhile, in its third bi-monthly policy review of this fiscal yesterday, RBI kept the short-term lending rate, or repo rate, unchanged at 7.25 per cent and the cash reserve ratio (CRR), the amount of deposits lenders park with RBI, at 4 per cent.
Retaining the growth forecast at 7.6 per cent for 2015-16, the central bank said the outlook is improving gradually.
In other markets in Asia, Hong Kong's Hang Seng ticked up 0.22 per cent while Japan's Nikkei rose 0.81 per cent in early trade today.
The US Dow Jones Industrial Average was down 0.27 per cent in yesterday's trade.