The benchmark BSE Sensex recovered over 193 points and the Nifty regained the 9,800-mark in early trade today on buying in banking, oil and FMCG stocks after recent losses.
Speculators covering up their short positions ahead of the August derivatives contract expiry tomorrow added to the upward move.
The BSE 30-share barometer rebounded by 193.39 points, or 0.61 per cent, to 31,581.78. The gauge had lost 362.43 points in the previous session in line with a general weakness across the globe fuelled by North Korea's missile launch over Japan.
All the sectoral indices led by realty, metal, infrastructure and banking were in the green, adding up to 1.23 per cent.
The NSE Nifty was also higher by 75.20 points, or 0.76 per cent, to quote at 9,871.25.
Traders said a rebound at other Asian markets as investors shrugged off geopolitical tensions a day after North Korea fired a missile that flew over northern Japan influenced trading sentiments here.
Besides, fresh spell of buying by retail investors and uninterrupted buying by domestic institutional investors (DIIs) helped recover the market.
Adani Ports surged the most among Sensex components gaining 2.29 per cent, followed by Sun Pharma (1.44 per cent).
Other gainers included HDFC Ltd, Cipla, Axis Bank, Tata Steel, ICICI Bank, Hero MotoCorp, Maruti Suzuki, Coal India, Reliance Industries, SBI and Tata Motors, rising by up to 1.44 per cent.
In Asian trade, Japan's Nikkei was up 0.55 per cent while Hong Kong's Hang Seng rose 0.79 per cent in early deals.
Shanghai Composite too edged higher 0.05 per cent.
The US Dow Jones Industrial Average ended higher by 0.26 per cent yesterday.