Besides, a firming Asian cues supported the recovery in the domestic markets.
The 30-share barometer recovered by 87.77 points, or 0.32 percent, to 27,145.18 as power, banking, infrastructure and capital goods sector stocks led gains. The index had lost 262.44 points in the previous two sessions.
On similar lines, the wide-based National Stock Exchange index Nifty edged higher by 30.40 points, or 0.38 percent, to 8,124.50.
Brokers said apart from fresh buying by participants after the government cleared stake sale in Coal India, ONGC and NHPC, a firming trend on other Asian bourses following overnight gains on US market helped trading sentiment to improve.
The CCEA has cleared 10 percent stake dilution in CIL, 5 percent in ONGC and 11.36 percent in NHPC through the Offer For Sale (OFS) route.
In the Asian region, Japan's Nikkei was up by 0.60 percent, while Hong Kong's Hang Seng index rose 0.09 percent in the morning trade on Thursday.
US Dow Jones Industrial Average rose 0.32 percent in Tuesday's trade.

Latest News  from Business News Desk