The key benchmark indices opened higher on Thursday, a day after it tanked after the Reserve Bank of India (RBI) stunned the market with an increase in policy rates, citing inflationary pressures.
Sensex gained over 500 points to open at 56,146 while Nifty rose 150 points to 16,828.
The broader markets, meanwhile, opened in green. The BSE MidCap and SmallCap indices were up to 0.5 per cent higher.
On the BSE, 7 of the 30 stocks opened in red; NTPC, Asian Paint, Bharti Airtel were major losers on BSE with up to 1.6 per cent dip.
On the other hand, Tata Steel, Infosys, SBI, Kotak Bank, Tech Mahindra were among major gainers with up to 2.2 per cent rise.
Sectorally, Nifty Bank, Auto, Financial services, FMCG were among the major gainers.
The SGX Nifty had indicated a positive start for the equity market. Nifty futures on the Singapore Exchange traded 150 points, or 0.90 per cent, higher at 16,839, signaling that Dalal Street was headed for a positive start on Thursday.
The Federal Reserve on Wednesday raised its benchmark overnight interest rate by half a percentage point and said it would begin shrinking the central bank's $9 trillion asset portfolio next month in an effort to further lower inflation.
US stocks rallied sharply after the Fed downplayed the aggression in rate hikes, whereas Asian stocks were trading with strong gains.
Major Asian stocks started Thursday with a healthy advance after the Federal Reserve lifted interest rates. MSCI's index of Asia-Pacific shares outside Japan was up by 1.08 per cent.
Japan's Nikkei dropped 0.06%, Australia's ASX 200 gained 0.56%, South Korea's Kospi jumped 0.08%, New Zealand's DJ surged 0.61%, China's Shanghai added 0.37%, Hong Kong's Hang Seng rallied 1.39%