Lenders led the rise with Axis Bank, SBI, HDFC Bank, ICICI Bank rallying in the range of 1.65 percent to 2.88 percent.
In volatile movements, the 30-share gauge opened on a strong footing but succumbed to profit-booking and slipped into the negative zone to touch a low of 28,622.44.
However, it staged a strong comeback following a flurry of buying in the later part of the session to close higher by 177.46 points or 0.62 percent higher at 28,885.21.
The Sensex has now garnered over 927.72 points in five sessions and is at nearly four-week highs. The previous high was on March 12 when it ended at 28,930.41.
The wide-based NSE Nifty index spurted by 63.90 points, or 0.73 percent, to close at 8,778.30. During the session, it shuttled between 8,785.50 and 8,682.45.
Brokers said sentiments bolstered with banking stocks witnessing buying interest after Moody's raised India's credit rating outlook to 'positive' and said an upgrade in its sovereign rating is also possible in the next 12-18 months.
The BSE banking index gained the most by rising 2.58 percent.
In the banking space, prominent gainers were PNB at 6.03 percent, IndusInd Bank 4.63 percent, Kotak Bank (4.16 pc),Bank of India (3.15 pc), Axis Bank (2.88 pc), Yes Bank (2.67 pc), SBI (2.50 pc), Canara Bank (2.48 pc), Bank of Baroda(2.40 pc), HDFC Bank (1.68 pc) and ICICI Bank (1.65 pc).
Out of 30-Sensex stocks, 18 ended with gains, while 12 others finished in the negative zone.
Among other sectoral indices, metal rose by 1.43 percent, PSU index 0.89 percent, IT index (0.50 percent) and Power index (0.37 percent), among others.
In tandem with overall trends, smallcap index rose 0.71 percent while BSE midcap index edged up by 0.25 percent.
Furthermore, a firm trend among other Asian markets and higher opening across European markets also buoyed sentiments.
Foreigners sold shares worth Rs 479.18 crore, while Domestic Institutional Investors bought shares worth Rs 382.54 crore on Wednesday, as per provisional data.

Latest News  from Business News Desk