The auto and banking indices surged by more than 2% each, with ICICI Bank and Maruti Suzuki leading the gains
The Sensex ended at 27,396, higher by 219 points, or 0.8%, and the Nifty ended at 8,286, up 72 points.
The broader markets out-performed the front-liners, with the Midcap and Smallcap indices gaining more than 1% each at 10,326 and 10,837 levels, respectively.
The markets had ended lower for the third straight day and the Nifty had slipped below its 200-DMA on Monday's session.
And the struggle continued this morning, as the indices touched their lowest level in almost 16 weeks at the onset of the trading session.
However, short-covering at lower levels helped the indices to snap a three-day losing streak.
A late-noon burst drove the Sensex higher by 300 points to touch an intra-day high of 27,482 and the Nifty momentarily reclaimed the 8,300 mark to touch 8,308 before surrendering a part of the gains in the last 30 minutes of trade.
On the global front, the Asian markets had a mixed sesison of trade, while the European bourses, including the CAC, DAX and FTSE were trading lower by almost 1% each.
"After taming of Yemen crisis, biggest global fear for the market is rate hikes by developed economies like US and Europe which are widely expected in the current year.
Crude oil prices continued to show high volatility. Markets currently are keenly watching the outcome of Greek crisis and developments in the Euro region and US economy.
We expect the Indian markets to remain bullish in the coming week and Nifty to remain in the range of 8,600-9,100 in the coming weeks," said Rakesh Goyal, senior vice president at Bonanza Portfolio.
BUZZING STOCKS & SECTORS
The day clearly belonged to the auto and banking indices, which surged by more than 2% each; however, the FMCG and IT indices shed about a per cent each.
Auto stocks advanced on renewed buying interest. Maruti Suzuki hit lifetime high on strong Q4 performance.
The stock extended previous trading session's gains, jumping by another 4.9% at Rs 3,826 after reporting a strong 61% year on year net profit growth at Rs 1,284 crore for the fourth quarter ended March 31, 2015 (Q4FY15).
Tata Motors and Hero MotoCorp have added between 1% and 2% each.
The auto-ancillaries space also had a strong session, with Apollo Tyres, Bharat Forge and Exide adding between 2% and 3% each.
In the banking space, ICICI Bank gained 8.1% at Rs 327 on value buying and in wake of the fact that domestic brokerages upgraded the stock with ‘buy’ rating on expectations of improvement in asset quality going forward.
The private banking heavyweight had shed around 2% in a knee-jerk reaction post its Q4 numbers on Monday.
In the process, ICICI Bank has gained significantly and has erased the losses accumulated over the last three weeks.
Axis Bank, SBI and Yes Bank added between 1% and 2% each. The midcap banking space also saw a lot of action, with Federal Bank, IndusInd Bank and Bank of Baroda adding between 1% and 4% each.
In a post result note, analysts at Centrum Broking have maintained a hold rating on ICICI Bank with target price of Rs 340. "Q4FY15 results were in line with estimates on P&L front and showed another quarter of improvement in its CASA franchise, capital position and retail balance sheet.
Stressed asset accretion came in higher at Rs45.1bn (4.7% of loans), dragged down by slippages from the restructured portfolio.
While challenges from NPAs prevail, we expect it to have bottomed-out," the Centrum note said. Idea Cellular jumped by 3.8% at Rs 192 and Bharti Airtel gained 2.4% at Rs 400 ahead of their Q4 numbers scheduled to be announced post market hours.
On the other hand, the selling pressure on the IT counters continued unabated following a spate of weak numbers posted by behemoths such as Infosys, TCS and Wipro, which shed upto another 2% each.
The FMCG majors such as ITC and HUL also shed between 1% and 2% each as the gloomy forecasts about the monsoons have raised fears of further decline in rural demand.
Wockhardt plummeted by 6.5% at Rs 1,243, extending its previous day’s 18% fall, after the drug maker said that it has decided to recall the remaining batches of some products manufactured in the facilities at L1- Chikalthana and Waluj in Aurangabad, Maharashtra, as a part of remedial measure.
The market breadth was strong; out of 2,822 stocks traded on the BSE, there were 1,640 advancing stocks as against 1093 declines.