The benchmark Sensex on Thursday jumped by over 205 points, its first rise in eight days, buoyed by gains in interest-rate sensitive sectors after RBI announced fresh steps to boost liquidity in the banking system and on fresh hopes that US Fed will maintain its economic stimulus.

The Sensex, which had lost 1,045 points in the past seven sessions, recovered by 205.02 points, or 1.02 per cent, to end at 20,399.42. It had touched a high of 20,568.99 intra-day.

Tata Motors, ICICI Bank, L&T, HDFC Bank, Tata Steel and M&M shares helped the 30-share index gain and snap its longest selling streak since the eight days ended August 2, 2013.

Stock markets appeared to have ignored WPI inflation that rose to 7.0 per cent year-on-year in October from 6.5 per cent in September. Analyst Sonal Varma of Nomura said the data were generally “in line” with expectations.

On similar lines, the NSE index Nifty rose by 66.55 points, or 1.11 per cent, to end at 6,056.15 led by stocks of auto, bank and realty. Also, SX40 index of MCX-SX bourse ended at 12,119.39, up 117.27 points or 0.98 per cent.

In step with the recovery in stock markets, the rupee was last trading higher at 63.25 versus the US dollar.

Brokers said the market was in an “oversold position” and recovered on buying amid RBI planning to undertake open market operation next week by injecting Rs 8,000 crore into the system.

In the US, Janet Yellen, nominated to be the next chairman of the Fed, today indicated a strong economic recovery would enable the central bank to trim its $ 85-billion-a-month bond buying programme.

The comments spurred hopes of the US Fed sticking to its current pace of asset purchases after the recent jobs and GDP data led to speculation that the bond-buying would be trimmed.

Sectorally, the BSE Auto sector index gained the most by rising 2.91 per cent, followed by Banking (2.66 per cent), Realty (2.28 per cent) and Capital Goods (1.88 per cent).

The market will be closed tomorrow on account of ’Muharram.’ For the week ended November 14, Sensex dipped by 266.73 points or 1.29 per cent, the second loss in a row.

More In: Markets | Business