The Sensex headed up today surging 160 points as investors welcomed the Cabinet's decision to give 'in-principle' nod to disinvestment of Air India, a sign the government is not shying away from bold reforms.
A firm trend in Asia brought risk appetite back.
Speculators went about covering their short positions in anticipation of more reforms, today being the expiry of June futures and options derivative contracts.
The 30-share index, which had lost 456.42 points in the previous three sessions, rose 159.85 points, or 0.51 per cent, to 30,994.17.
All sectors were in the green. Realty, metal and capital goods led the upmove, with gains of up to 1.16 per cent.
The NSE Nifty too went higher by 47.10 points, or 0.50 per cent, to 9,538.35.
Traders said market sentiment improved largely in line with a better trend at other Asian markets, reflecting overnight gains on Wall Street.
A fresh spell of buying by domestic and retail investors after selling shares for several sessions and recovery in the rupee contributed to the lift.
Axis Bank, Bharti Airtel, Tata Steel, M&M and L&T stayed in the lead, rising by up to 3.07 per cent.
Globally, Hong Kong's Hang Seng was up 0.81 per cent, Japan's Nikkei 0.54 per cent and Shanghai Composite 0.21 per cent in early trade today.
The US Dow Jones Industrial Average ended 0.68 per cent up yesterday.