Bank shares were the top gainers along with IT majors while Maruti Suzuki surged on robust FY16 earnings.
Markets recouped early losses to end near day's high, amid a rebound in European stocks, with stock specific action seen post the fourth quarter earnings.
Further, recovery in global crude oil prices also aided sentiment.
The S&P BSE Sensex ended up 328 points at 26,007 and the Nifty50 ended up 108 points at 7,963.
In the broader market, the BSE Midcap and Smallcap indices ended up 0.7%-0.8%. Market breadth ended firm with 1567 gainers and 998 losers on the BSE.
"Global markets are on a rebound with an upswing in oil prices creating a filip in the Indian equity markets as well. Further, better-than-expected earnings from Maruti Suzuki aided sentiment and recovery was seen across sectors," said Mayuresh Joshi, Fund Manager, Angel Broking.
Global crude oil prices were trading nearly 1% higher with Brent crude heading towards $45 a barrel while NYMEX crude was inching closer to $43 a barrel.
Foreign funds were net buyers in equities worth Rs 222 crore, as per provisional stock exchange data.
Banks shares ended higher after some of them posted robust earnigns for the fourth quarter.
HDFC Bank, IndusInd Bank, Yes Bank, Kotak Mahindra Bank, SBI and ICICI Bank ended up 0.6%-3.8% each. Axis Bank ended up 2.8% ahead of its fourth quarter earnings later today.
Hindalco emerged as the top Sensex gainer to end over 5% after the company said that Metals X Ltd conditionally intends to increase its offer for Hindalco's subsidiary Aditya Birla Minerals Ltd to one MXL share for every 4.5 shares of ABML plus an additional 8 cents per ABY share in cash. ABML is listed on the Australian Stock Exchange.