The broader NSE Nifty took back the 7,900-mark during the session. All eyes are now on the crucial two-day US Federal Reserve meeting starting today, where the rate-setters are going to take a call on raising the borrowing costs for the first time in almost a decade.
Sentiment remained upbeat as investors are hopeful that the Reserve Bank would cut rate for the fourth time this year at its policy review on September 29 after data showed retail inflation easing to 3.66 percent in August, much below the RBI's guidance level.
In line with domestic equities, the rupee also wiped off most of its early losses to trade almost flat at 66.36 (intra-day) against the dollar.
After opening in the positive zone, the 30-share Sensex barometer rose further to regain the 26,000-level and hit a high of 26,006.75 in afternoon trade.
But it failed to sustain momentum due to profit-booking at higher levels and slumped to 25,816.50, before settling higher by 258.04 points, or 1 percent, at 25,963.97, its highest closing since August 31.
The gauge had retreated from a two-week high by losing 150.77 points in the previous trading session yesterday.
Also, the 50-issue NSE Nifty after reclaiming 7,900-level advanced to hit the day's high of 7,913.90, before closing at 7,899.15, up 70.05 points, or 0.89 percent.
Brokers said the investor appetite was back as participants widened their bets tracking a firm trend at other Asian bourses amid speculation of state-led buying, with Shanghai Composite index closing 4.89 percent up.

The banking sectoral index advanced the most by surging 1.42 percent, followed by power, healthcare, technology, auto and IT.


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