The Bombay Stock Exchange benchmark Sensex, which lost nearly 7 per cent in the last six sessions dipping to a low of 19,048.56, rebound by gaining 337.76 points to close at 19,534.10, even though the industrial output data (IIP) for November showed a steep plunge.
The broad-based National Stock Exchange index Nifty rose by 109.15 points to 5,863.25, after touching the day`s low of 5,711.30 in a volatile trade.
Marketmen said slowdown in factory output numbers eased concern of a high interest-rate hike by the Reserve Bank of India to tame spiralling inflation.
They said markets rebound as investors indulged in value-based buying in stocks available at attractive low prices after a strong sell-off in last six days.
Besides, the recovery was bolstered on higher cues from global stock markets, which cushioned the impact of steep fall in industrial production data back home.
Asian stocks rose, sending the MSCI Asia Pacific Index to its first advance in four days, as higher oil and metal prices buoyed commodity shares on speculation.
In 30-BSE index components, 22 stocks ended with gains while eight closed lower. Barring capital goods, all sectoral indices finished in positive zone.
The consumer durable sector index gained the most by rising 4.64 per cent to 6,180.93 followed by realty sector index by 3.27 per cent to 2,582.36.
The metal sector index rose by 2.80 per cent to 16,990.74 as price in London climbed for the second day after Japan joined China in buying euro-area bonds, easing concerns that Europe?s debt crisis may derail the global economic recovery.
The banking index jumped by 2.66 per cent to 12,615.94 as ICICI Bank climbed the most in three weeks by adding Rs 45.70 to Rs 1,068.90.
The auto sector index was next on the chart with a hefty gain of 2.02 per cent to 9,506.57 as Tata Motors depicted a record jump in five months by adding Rs 56.10 to Rs 1,216.40.