The benchmark S&P BSE Sensex snapped two days of losses and closed 124 points higher as the rupee recovered from an all-time closing low on expectations the government would take more steps to support the currency.
Stocks also got a boost on economic data from China, which reported better-than-expected trade results for July, marking a sharp recovery from the previous month.
The 30-share Sensex resumed higher at 18,687.30 and traded between 18,621.67 and 18,829.26 before closing at 18,789.34, a gain of 124.46 points or 0.67 per cent. The index had declined 517.38 points, or 2.7 per cent, in the previous two sessions.
The 50-share Nifty index on the National Stock Exchange firmed up 46.55 points, or 0.84 per cent, to finish at 5,565.65. The SX40 index on the MCX-SX closed at 11,153.85, up 81.09 points, or 0.73 per cent.
"Positive data from China boosted sentiment in global markets and European indices were in positive territory," said Rakesh Goyal, senior vice president at Bonanza Portfolio. "The rupee too strengthened slightly today."
The rupee recovered from a record closing low of 61.30 yesterday and was at 60.85 against the dollar in late afternoon trade. Economic Affairs Secretary Arvind Mayaram hinted in Mumbai that the government would come out with more measures to support rupee.
"I think you should wait till the end of the week...The Finance Minister will be talking about this later," he said.
Ranbaxy Laboratories surged 27.5 per cent to Rs 359.40, the biggest gainer in the market, after saying yesterday its first-quarter loss had narrowed. Gainers on the Sensex were led by Hindalco Industries, Tata Steel and Cipla, all of which climbed more than 5 per cent.
Metals, realty, power and auto shares firmed up, with their sectoral indices gaining 1.68 per cent to 2.61 per cent.
The Sensex has declined for the third week in a row, losing 374.68 points, or 1.95 per cent, in the past four sessions. The BSE is closed tomorrow for Id-ul Fitr.
