Benchmark Sensex rebounded by almost 261 points to close at 35,547.33 on Wednesday, breaking its two-day falling streak as investors accumulated recently beaten down metal, banking and realty counters.
Oil-to-telecom conglomerate Reliance Industries topped the gainers' list in the Sensex pack spurting 2.44 per cent to end at a record high of Rs 1,019.95.
Overseas, Asian and European stocks too bounced back, reversing some of their recent losses following escalating trade tensions between the US and China.
Brokers said investor sentiment got a boost after the Reserve Bank on Tuesday announced the purchase of government securities of up to Rs 10,000 crore on June 21 to help in liquidity management.
The 30-share Sensex stayed in the green throughout and hit the day's high of 35,571.37 on a flurry of buying. It finally ended at 35,547.33, up 260.59 points, or 0.74 per cent.
The gauge had lost 335.40 points in the previous two sessions, tracking a sell-off across global markets after the US and China reignited their trade dispute.
The broader NSE Nifty climbed 61.60 points, or 0.58 per cent, to close at 10,772.05. Intra-day, it shuttled between 10,781.80 and 10,724.05.
Domestic institutional investors (DIIs) bought shares worth a net Rs 653.68 crore while foreign portfolio investors (FPIs) sold equities to the tune of Rs 1,324.92 crore yesterday, as per provisional data.