The 30-share index, which had lost 606.58 points in the previous two sessions, recovered by 128.14 points, or 0.50 percent, to 25,608.95, with all the sectoral index, led by realty, banking and metals, trading in positive zone with gains up to 1.31 percent.
Also, the National Stock Exchange index Nifty rose 38.20 points, or 0.50 percent, to 7,640.80.
Brokers said that a firming trend in Asian markets on the back of Chinese data showing a recovery in the world's second-largest economy, and value-buying by funds and retail investors after recent sell-off, influenced the sentiments.
They, however, cautioned ahead of RBI's policy review on Tuesday, limited the gains.
Meanwhile, overseas investors have pumped in a staggering USD 6 billion into the Indian securities market in July - taking their overall net inflows since beginning of 2014 to more than USD 26 billion, driven by an investment-friendly government at the Centre.
Among other Asian markets, Hong Kong's Hang Seng was up 0.24 percent while Japan's Nikkei rose 0.03 percent in the morning trade.

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