Mumbai: The BSE Sensex regained the 17k level after over 3-weeks on Friday - up 199 points at 17,082.69 - on funds buying blue-chips such as RIL and Infosys amid firm European markets, although domestic inflation remained close to the double-digit.

Firm European signals and sustained buying by foreign funds boosted the investor sentiment.

Three top heavyweights, RIL, Infosys Tech and ICICI Bank, which have nearly 30 percent weight in the BSE 30-share index, Sensex, added over 90 points to the gain.

Other blue-chips including TCS, Bharti Airtel, Jindal Steel, Tata Motors, HDFC Bank, Wipro, Bajaj Auto and HUL were in keen demand as well.

Although overall inflation softened a bit to 9.72 percent in September, from 9.78 percent in August, it is still above the Reserve Bank's comfort level of around 5 percent.

RBI, which has raised interest rates 12 times since March last year to tame inflation, is slated to review the monetary policy later this month.

Meanwhile, the Prime Minister's Economic Advisory Council (PMEAC) said that there was no sign of moderation in the rate of price rise to prompt RBI to change its policy of monetary tightening. The high interest rate regime has made borrowing costly and hit corporate margins.

Initially, Sensex touched a low of 16,828.45 due to some weakness in Asian stocks, but gradually it moved upwards on higher European openings and settled at 17,082.69, up 198.77 points or 1.18 per cent.

The NSE 50-issue Nifty also recovered 54.45 points or 1.07 percent to end at 5,132.30, a level not seen since September 21.