The Sensex, which commenced the day on a weak note at 26,275.07, slipped further to touch the day's low of 26,092.69 after investors focussed on weak economic data.
However, late buying by overseas funds and retail investors at prevailing levels helped the 30-share index rebound and close with a gain of 86.69 points, or 0.33 percent, at 26,384.07. Intra-day, it rose to a high of 26,443.16. The gauge had plunged 340 points on Friday on profit-booking.
India's industrial production slowed down to a five-month low of 0.4 percent in August due to contraction in manufacturing output and lower offtake of consumer goods. However, investors ignored the data in afternoon trade.
Coal India caught buyers' fancy among the Sensex pack and it rose 1.91 percent after reports said foreign brokerage HSBC upgraded the stock to "overweight" from "neutral".
Other major gainers which also helped the Sensex to close in positive zone were Tata Power, Tata Steel, TCS, ICICI Bank, Axis Bank, Maruti Suzuki, HDFC, HDFC Bank, Bajaj Auto, ONGC and Hindalco.
Stocks of RIL ended 0.26 percent lower ahead of quarterly earnings to be released later this evening.
Selling in Cipla, Dr Reddy's, Sun Pharma, ITC, Hindustan Unilever, Mahindra and Mahindra, L&T, NTPC, BHEL, Bharti Airtel and GAIL, capped the rise, brokers said.
Overall, 17 Sensex shares ended higher while 13 finished in the negative zone.
Sectorally, the BSE Metal index gained the most by rising 1.37 percent, followed by Banking (1.35 percent), IT (1.17 percent), PSU (0.77 percent), Power (0.14 percent) and Oil & Gas index (0.11 percent).
The broad-based 50-issue Nifty of the NSE also recovered by 24.30 points, or 0.31 percent, to 7,884.25. It shuttled between 7,796.00 and 7,901.15 during the session.

Meanwhile, FIIs sold shares worth a net Rs 719.77 crore last Friday as per provisional data from exchanges.
Globally, it was a mixed closing on other Asian bourses while cues were positive from the European markets.

Latest News  from Business News Desk