Benchmark Sensex rebounded 335 points and Nifty closed above the 22,100 level on Thursday on the back of buying in IT shares and metal shares as broader markets recovered from previous day's sharp losses.
The 30-share BSE Sensex climbed 335 points to settle at 73,097. During the day, it jumped 602.41 points to 73,364.
The NSE Nifty gained 148.95 points to 22,146.65.
From the Sensex pack, HCL Technologies, Infosys, Wipro, Bharti Airtel, Larsen & Toubro, Mahindra & Mahindra, Tata Consultancy Services and Asian Paints were the major gainers.
Axis Bank, IndusInd Bank, Bajaj Finance, JSW Steel, State Bank of India and Tata Steel were among the major laggards.
The broader markets also staged a smart recovery, with the BSE Smallcap gauge jumping 3.11% and midcap index climbing 2.28%.
Wholesale inflation rate declined marginally to 0.2% in February compared to 0.27% in the preceding month despite a slight uptick in the food basket.
"The market was able to recover half of last trading day’s sell-off as leverage based square-off neutralised it, while institutional buying sustained the buoyancy.
"Domestic economic data Wholesale Price Inflation (WPI) eased to four-month low at 0.2% YoY in February, bringing ease to upcoming CPI trajectory, a relief for future rate cuts. The broader market is outperforming the headline indices, taking advantage of mid and smallcap as a bargaining strategy," said Vinod Nair, Head of Research, Geojit Financial Services.
Fitch Ratings raised India's economic growth forecast to 7% for the next fiscal year on the back of strong domestic demand and sustained level of business and consumer confidence.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 4,595.06 crore on Wednesday, according to exchange data.
In Asian markets, Seoul and Tokyo settled in the green while Shanghai and Hong Kong ended lower.
European markets were trading mostly in the green. The US markets ended on a mixed note on Wednesday.