Rate cut hopes and short-covering ahead of tomorrow's monthly expiry of derivative contracts boosted buying. Positive cues from global markets and lower crude oil price also provided support, traders said.
In line with rise in key indices, the Indian rupee also firmed up to 61.83 (intra-day) against dollar.
In volatile movements, the BSE Sensex resumed lower and then slipped further to hit the day's low of 28,261.31. Emergence of buying towards the middle of session helped wipe off initial losses to close higher at 28,386.19, logging a rise of 48.14 points, or 0.17 percent.
The Sensex had lost 161.49 points in yesterday's trade.
Among the 30-Sensex pack, 17 constituents led by GAIL, Sesa Sterlite, ITC, BHEL, Hindalco and M&M ended higher.
ITC had dropped 5 percent yesterday after Ministry of Health accepted an expert panel's recommendation on prohibition on sale of single stick of cigarette and increasing minimum legal age for sale of tobacco products.
Sensex laggards included Bharti Airtel, ICICI Bank, Bajaj Auto, RIL, TCS, L&T, Maruti Suzuki, HDFC Bank and Sun Pharma.
DLF surged 7.2 percent and Unitech rose 4.4 percent after Urban Development Ministry approved enhancement of Ground Coverage and Floor Area Ratio in Delhi.
"Led by the Delhi government's decision to increase the Delhi city's floor area ratio by 200 percent, most realty sector stocks saw huge surge in buying activity," said Rakesh Goyal, Senior Vice President, Bonanza Portfolio.
The 50-issue Nifty of the NSE also saw a mild recovery and closed 12.65, or 0.15 percent, higher at 8,475.75.
Brokers also said after yesterday's drop, activity gathered momentum ahead of key macro economic data releases, including September-quarter GDP data later this week.
Meanwhile, provisional data showed that FPIs/FIIs bought shares worth a net Rs 1,168.94 crore yesterday.
Sectorally, BSE Realty index gained the most by surging 4.03 percent, followed by Power 1.13 percent, Metal 1.08 per cent and FMCG 1.07 percent, among others. Smaller shares also saw fresh spell of buying with BSE Smallcap index (1.12 per cent) and Midcap index (0.62 percent) logging gains.

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