The S&P BSE benchmark Sensex moved up by 279.80 points in late morning trade on the back of short-covering in view of last day of futures & options contract coupled with recovery in Indian rupee against the dollar following RBI's steps to check free-fall of the domestic currency.
Shares of Consumer Durable, Capital Goods and IT sectors firmed up on good buying enquiries.
The battered rupee recovered after the Reserve Bank of India (RBI) yesterday said it has started a facility to meet the daily dollar requirement of the country's three state-run refiners, aimed at reducing currency market volatility.
The Sensex resumed higher at 18,073.66 and firmed up further to 18,205.49 before quoting at 18,197.33 at 1040 hrs, showing a gain of 201.18 points or 1.12 per cent from its last close.
The NSE 50-share Nifty also moved up by 53.95 points or 1.02 per cent to 5,338.95 at 1040 hrs.
Major gainers were HDFC (4.49 pc), Larsen & Toubro (2.72 pc), Tata Consultancy Services (TCS) (1.96 pc), Bharti Airtel (1.91 pc), HDFC Bank (1.71 pc), GAIL (1.43 pc) and Dr Reddys Laboratories (1.26 pc).
The market is to remain volatile today in view of expiry on August contract.
Asian stocks rose in their early trade as a weaker-than-expected report on US durable goods orders triggered speculation that the Federal Reserve may delay plans to reduce its monetary stimulus.
Brokers said sentiments turned better after the rupee recovered from its record low after RBI announced fresh measures in a bid to check the rupee's free-fall and a firming trend in the Asian region in line with overnight gains on the US markets.
KEY FACTORS/EVENTS TO WATCH
Expiry of August equity derivative contracts
The Reserve Bank of India's outgoing Governor Duvvuri Subbarao will give a lecture on "Five Years of leading RBI - Looking Ahead by Looking Back".