Benchmark Sensex rebounded 335 points while Nifty closed above the 22,100 level on Thursday as buying in IT and capital goods shares helped broader markets recover from the previous day's sharp losses.
The 30-share BSE Sensex climbed 335.39 points or 0.46% to settle at 73,097.28 with 20 of its constituents ending in the green and 10 in the red. During the day, it jumped 602.41 points or 0.82% to 73,364.30.
The broader Nifty gained 148.95 points or 0.68% to close at 22,146.65 as 37 of its components settled higher and 13 with losses.
Sensex 906.07 points, or 1.23% while Nifty plunged by 338 points, or 1.51%, to close below the 22,000 level on Wednesday due to heavy selling pressure.
"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," said Vinod Nair, Head of Research, Geojit Financial Services.
"Wholesale Price Inflation (WPI) eased to a four-month low at 0.2% in February, bringing ease to upcoming CPI trajectory, a relief for future rate cuts," Mr. Nair added.
From the Sensex pack, HCL Technologies rose the most by 2.96%. Gains in Larsen &Toubro, Infosys, Wipro, Bharti Airtel, Mahindra & Mahindra, Tata Consultancy Services and Asian Paints helped key indices to recover losses.
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%.
The broader market is outperforming the headline indices, taking advantage of mid and smallcap as a bargaining strategy, analysts said.
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.
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.
"Markets recovered after Wednesday’s fall and gained over half a per cent. Importantly, it was the rebound in the broader indices, which eased some pressure and aided strong market breadth," Ajit Mishra, SVP - Technical Research, Religare Broking Ltd, said.
Among the indices, services jumped 3.99%, telecommunication climbed 3.81%, utilities (3.38%), oil & gas (3.11%), power (2.93%), industrials (2.66%) and commodities (2.49%).
Bankex index emerged as the only laggard.
A total of 2,722 stocks advanced while 1,153 declined and 83 remained unchanged on the BSE. Foreign Institutional Investors (FIIs) offloaded equities worth ₹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 U.S. markets ended on a mixed note on Wednesday.
Global oil benchmark Brent crude climbed 0.76% to $84.67 a barrel.
