The 30-share index, which had lost 661.77 points in the previous two sessions, rose by 108.91 points, or 0.54 per cent, to trade at 20,337.96.
The National Stock Exchange index NSE Nifty gained 29.95 points, or 0.50 per cent, to trade at 6,029.00.
Brokers said fresh buying by funds, tracking a firming trend on other Asian bourses after the US Dow Jones closed above the 16,000 level for the first time on the back of a slew of upbeat economic data, influenced the trading sentiments here.
Among other Asian markets, Hong Kong's Hang Seng index was up 0.52 per cent, while Japan's Nikkei gained 1.23 per cent in early trade today.
The US Dow Jones Industrial Average ended at a new record high by gaining 0.69 per cent yesterday.