The 30-share index, which had lost 189.04 points in the previous session, recovered 162.46 points, or 0.58 percent, at 28,040.73 with IT, metal and capital goods sector stocks leading the recovery.
On similar lines, the National Stock Exchange index Nifty reclaimed the 8,500-mark by rising 34.95 points, or 0.41 percent, at 8,512.25.
Brokers said sustained buying by funds and retailers amid a firming trend at other Asian markets lifted by overnight gains on Wall Street after strong US housing data added to signs the world's top economy is strengthening.
Among other Asian markets, Hong Kong's Hang Seng index was up by 0.61 percent, while Japan's Nikkei gained 0.60 percent in early trade.
The US Dow Jones Industrial Average ended 0.39 percent higher in yesterday's trade.


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