The benchmark BSE Sensex left behind two days of losses to recover 230 points in early session on Wednesday, propped up by fresh buying triggered by positive GDP data for the December quarter amid favourable Asian cues.
The impact was such that even the broader NSE Nifty took back the 8,900-mark.
The 30-share index, which had lost 149.65 points in the previous two sessions, was trading higher by 229.56 points, or 0.80 per cent, at 28,972.88. All sectoral indices, led by realty, bank and metal, moved up, with gains of up to 1.29 per cent.
The Nifty climbed 61.80 points, or 0.70 per cent, to 8,941.40.
The risk appetite improved after the Central Statistics Office yesterday showed that India's economy expanded by 7 per cent in the third quarter, belying all fears of the note ban puncturing economic activity.
The government pegged GDP growth at a higher-than-expected 7.1 per cent for 2016-17 despite the cash blues, with manufacturing and agriculture doing exceptionally well, which in turn made India retain the tag of the world's fastest growing large economy.
The GDP projection for the fiscal at 7.1 per cent in the second advance estimate is the same as the first one put out by the CSO in January.
Besides, other Asian markets showed up firm, boosted by better-than-expected improvement in Chinese factory activity, traders said.
Hong Kong's Hang Seng was up 0.08 per cent and Japan's Nikkei went up 0.54 per cent while Shanghai Composite index rose 0.40 per cent in early trade. The US Dow Jones Industrial Average, however, ended 0.12 per cent lower.