The Sensex opened with a huge negative gap of 418 points at 12,178 owing to weakness in the US markets.
Aggressive buying in banking, realty and capital goods stocks helped the index to recover smartly and rebound into the positive zone.
The Sensex moved in a wide range of 802 points between 12,153 (low) and 12,995 (high) before finally settling with a gain of 265 points at 12,860.
The market breadth was marginally negative - out of 2,672 stocks traded, 1,316 declined, 1,277 advanced and 79 were unchanged.
The NSE Nifty ended with a gain of 71 points at 3,921.
ICICI Bank skyrocketed 8.4% to Rs 535. TCS zoomed nearly 7% to Rs 663. HDFC surged 5.3% to Rs 2,141. Bharti Airtel and BHEL advanced 5.1% each to Rs 785 and Rs 1,586, respectively.
SBI was up 4.3% at Rs 1,466. Larsen & Toubro added 4.2% at Rs 2,443, while Jaiprakash Associates gained 4.1% to Rs 111.
Maruti inched up 3.7% to Rs 687. NTPC moved up 3.3% to Rs 172. HDFC Bank gained 2.5% to Rs 1,229.
Reliance Communications, Mahindra & Mahindra and Satyam were the other major gainers.
...AND THE SHAKERS
Tata Steel tumbled 4.4% to Rs 426, and Tata Motors declined 3.3% to Rs 344. Ranbaxy slipped 3.2% to Rs 248. Grasim dropped 2.6% to Rs 1,688.
ITC and Tata Power were down 1.3% each to Rs 906 and Rs 188, respectively.
Hindustan Unilever shed 1.2% to Rs 251. Sterlite and Wipro declined over 1% each at Rs 428 and Rs 340, respectively.
VALUE & VOLUME TOPPERS
Reliance Capital topped the value chart with a turnover of Rs 405.22 crore followed by Reliance (Rs 356.16 crore), ICICI Bank (Rs 336.94 crore), Larsen & Toubro (Rs 206.55 crore) and Axis Bank (Rs 203.49 crore).
Reliance Natural Resources led the volume chart with trades of around 2.33 crore shares followed by IFCI (1.27 crore), Suzlon Energy (89.37 lakh), Chambal Fertilisers (80.36 lakh) and Ispat (72.22 lakh).