Mumbai: The BSE benchmark Sensex snapped two-week losing streak and recovered 248 points on the back of bargain hunting amid a sharp fall in food inflation and the upgradation of Indian Government's long-term bonds by global credit ratings agency Moody's.

Buying was seen mainly in refinery, FMCG, auto, consumer durables and banking sectors.

Food inflation fell sharply to a 4-year low of 1.81 percent for the week ended December 10, from 4.35 percent in the previous week. It raised hopes that overall inflation might dip as well and prompt the Reserve Bank to start cutting interest rates to revive sagging economic growth.

Rate-sensitive banking and auto stocks rose after data released on Thursday showed food inflation eased to four-year low, cementing expectations of a steady easing in overall price pressures.

Moody's Investors Service raised India's local currency debt rating by one level to investment grade from the highest junk grade, boosting the market sentiment.

The 30-share Sensex resumed lower at 15,440.10 and dropped further to a 28-month low to 15,135.86. It recovered to 15,911.23 before ending the week at 15,738.70, up 247.35 points or 1.60 percent from its last weekend's level. It had lost 1,355.48 points, or 8.05 percent, in the last two weeks.

The NSE 50-share Nifty also gained 62.40 points, or 1.34 percent, to finish the week at 4,714.00. The index had lost 398.55 points, or 7.89 percent, in the last two weeks.

Sustained selling by foreign funds over the past few days, worries about euro-zone sovereign debt crisis and uncertainty in the Asian region after the death of North Korean leader Kim Jong-il had negative impact on the market sentiment.

Metal stocks declined on worries over global economic slowdown that could crimp demand.

Of the 30 BSE Sensex shares, 16 stocks fell while 14 rose. Major gainers from the Sensex pack were Tata Motors (7.20 percent), ICICI Bank (6.79 percent), HDFC (5.75 percent), M&M (5.63percent), HDFC Bank (5.20 percent), HUL (4.99 percent), Maruti Suzuki (4.80percent), ONGC (4.58 percent), ITC (4.30 percent) and RIL (3.24 percent).

However, Jaiprkash fell 9.14 percent, L&T - 6.24 percent, Jindal Steel - 5.87 percent, Tata Steel - 4.85 percent, Hero Motocorp - 3.71 percent, Bajaj Auto - 3.24 percent, Hindalco - 3.07 percent and Sun Pharma - 2.90 percent.

Among the major indices the BSE-Oil&Gas rose by 3.26 percent, followed by FMCG - 3.20 percent, Auto - 2.15 percent, Consumer Durables - 1.95 percent and Bankex - 1.15 percent.

However the BSE-Capital Goods fell 3.18 percent, Metal - 1.56 percent and Realty 1.36 percent. The total turnover at BSE and NSE dropped to Rs 9,520.37 crore and Rs 46,770.16 crore respectively, from the previous weekend's level of Rs 10,050.38 crore and Rs 50,279.35 crore.