Beaten down banking heavyweights spearheaded the recovery followed by auto, FMCG, capital goods, healthcare and technology counters.
Despite lack of signs how the global financial markets will react to the US Government shutdown, domestic trading sentiment turned highly positive on better-than-expected first quarter CAD number amid strong rebound in output of eight core industries in August.
India's current account deficit widened to 4.9 per cent, or USD 21.8 billion, of GDP for the April-June quarter but the number was better than expected.
Encouraging sales reported by auto companies added some cheer to the overall positive mood. Trading commenced on a positive note but soon lost momentum and turned volatile reacting to US shutdown news.
The market quickly rebounded on the back of value buying at lower-level along with short-covering. It maintained the buoyancy and ended the session on a strong note.
Most Asian and emerging markets closed higher amid caution in the backdrop of overnight developments in US after Democrats and Republicans failed to reach an agreement on budget spending bill before the midnight deadline on Monday, leading to a partial shutdown of the Federal Government.
The 50-share index hovered between a high of 5,786.45 and a low of 5,700.95 before concluding at 5,780.05, posting a smart recovery of 44.75 points, or 0.78 per cent.
DLF, Ranbaxy, IndusInd Bank, Axis Bank, ICICI Bank, HDFC Bank, BHEL, HDFC and Bajaj Auto were the prominent Nifty gainers. Key losers included Tata Power, Sesa Goa, NTPC, ONGC, HUL, BPCL, Ambuja Cement, Hindalco, Jindal Steel and HCL Tech.
Turnover in the cash segment dropped to Rs 9,015.86 crore from 9,400.34 crore yesterday. A total of 5,075.71 lakh shares changed hands in 54,68,979 trades. The market capitalisation stood at Rs 62,19,513 crore.