The benchmark indices erased their day's losses and settled over 1.5 per cent higher after the finance ministry said that the autonomy of the Reserve Bank of India (RBI) was "essential", in an attempt to dampen a spat between the government and the central bank.
The S&P BSE Sensex ended at 34,442, up 551 points (1.6 per cent), while the broader Nifty50 index settled at 10,387, up 188 points(1.9 per cent).
Among the sectoral indices, Nifty IT index settled 4.2 per cent higher led by gains in Tech Mahindra and Infosys. The Nifty Financial Services index, too, rose 2.3 per cent led by Indiabulls Housing Finance and Housing Development Finance Corporation (HDFC).
The rupee, too, has partially recovered from its day's low and is back in the 73 per dollar-levels. The Indian currency has fell to 74.14 against US dollar in intra-day trade, down its previous close of 73.67 against the greenback.
Govt says RBI autonomy 'essential'
Finance ministry said on Wednesday the autonomy of the Reserve Bank of India (RBI) was "essential", in an attempt to dampen a spat between the government and the central bank.
"The autonomy of the central bank ... is an essential and accepted governance requirement," the ministry said in a statement. "Governments in India have nurtured and respected this."
The comments came after reports suggested that the RBI governor Urjit Patel was on the verge of resigning over the breakdown in relations with the government.
Asian stocks clawed up from 20-month lows on Wednesday amid pledges by China to support its markets, but investor confidence was brittle after equity markets bled trillions of dollars in a grim October.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 1 percent, drawing support from gains on Wall Street overnight. Yet it was on track to fall around 11 percent this month, which would be its worst monthly performance since September 2011.
Hong Kong's Hang Seng rose 1 per cent on Wednesday and the Shanghai Composite Index climbed 1.2 per cent as weaker-than-expected factory activity data reinforced views that Beijing will roll out more support measures for the economy.
Australian stocks ended 0.4 per cent higher, South Korea's KOSPI added 0.7 per cent. In Japan, the Nikkei advanced 2.2 per cent, reassured by the Bank of Japan's signal that it will keep its ultra-easy policy for some time to come.
(with Reuters input)