Sensex resumed higher at 17,154.75 and shot up further before ending the day at 17,207.29, showing a rise of 110.61 points or 0.65 per cent from its last close.
The benchmark had dropped by 407.03 points or 2.33 per cent in the last two sessions.
Market players said TCS' impressive outlook for the current fiscal provided the much-needed impetus to the market.
Led by TCS that gained 12.84 per cent, BSE IT index closed nearly 5 per cent higher. TCS contributed nearly over 95 points to the surge in Sensex.
Inventure Growth & Securities, Head Research, Milan Bavishi said gains in Sensex were largely driven by IT stocks which jumped up strongly after TCS showed confidence in their growth prospects for FY13.
Market experts also said positive global cues helped the Sensex notch up smart gains.
"Sensex inched up into green in the afternoon session and extended its gain on positive openings in the European markets," said Bonanza Portfolio, Research Analyst, Shanu Goel.
Other major IT stocks Wipro and Infosys closed up in the 2-4 per cent range. Other gainers from the Sensex pack were Tata Power (2.54 pc), Hero Motocorp (2.30 pc), Infosys (1.58 pc), Hindalco (1.39 pc), Tata Steel (1.24 pc) and Sterlite (1 pc).