Markets rebounded after two day of sharp losses to end higher on Thursday after a strengthening rupee led to short covering in index heavyweights while Ranbaxy Labs zoomed after healthy US business growth on sequential basis helped restore investor confidence.

At close, the Sensex was up 0.7% or 124 points at 18,789 and the Nifty gained 0.8% or 46 points to end at 5,565.

In broader markets, the midcap and smallcap indices advanced 1.3% each, both outperforming the BSE benchmark index which closed 0.7% higher.