The Bombay Stock Exchange benchmark Sensex on Tuesday surged over 250 points after the market dropped 4.07 per cent on Monday.
The Sensex, which had lost 626.71 in Monday's trading, bounced back to end with a gain of 250.34 points at 15,035.26.
The key index touched the day's high of 15,134.51 and a low of 14,740.26 as trading remained choppy because of funds and general investors adjusting their portfolios.
Similarly, the 50-share National Stock Exchange index Nifty rose 71 points at 4,458.90, after rising to 4,491.45 and touching the day's low of 4,372.65.
Recovery in Asian as well as European stocks this afternoon further boosted trading sentiment following reports of a hike in new house sales data in the US and rising hopes of stability in the weakening global economies.
Major supporter to the markets were stocks in the capital goods, realty, metal, power and auto segments.
Overseas funds bought a net Rs. 1,030 crore of Indian stocks on August 14, the Securities & Exchange Board of India (SEBI) said on its web site.
The funds have bought stocks of Rs. 37,600 crore this year, compared with record net sales of Rs 53,000 crore for the whole of 2008.
