Rebound in IT majors TCS and Infosys in late trades helped markets end higher.
The Sensex opened on a flat note at 8,137, and dropped to a low of 8,121 in early deals.
The Nifty breached the 1,500-mark to end at 1,514 - up 26 points.
The benchmark BSE Sensex reclaimed the 28,000 mark, spurting by 409 points or 1.4% at 28,114 and Nifty settled above the 8,500 mark at 8,532, gains of 111 points.
Instead of being carried away by Friday's historic election verdict, savvy investors were seen taking money off the table, after the benchmark Sensex rallied about 1,500 points in intra-day trade.
Benchmark share indices ended lower for the third straight session as investors turned cautious amid tensions in Iraq even as consumer durables shares stole the limelight tracking rally in gold prices.
Oil, banks eneded the day in green while few in auto sector lost heavily.
The Nifty also added 15 points to finish at 1,762.
Indices reversed all its losses during late trades.
The dollar's gains against other currencies overseas and a lower opening in the domestic equity market also put pressure on the local unit, forex dealers said.
Market breadth remained strong with 1,581 advances over 1,018 declines on the BSE
With all the euphoria in the equity markets, there seems to be a mad rush to invest in diversified equity funds.
Markets ended higher for the second straight session mainly on the back of upbeat corporate earnings.
Analysts say that the focus now shifts to global events
Barring oil and gas, all BSE sectoral indices finished in the green.
The Indian stock market had rallied through the first fortnight of October but it gave back the bulk of its gains in the second half.
The sentiment-driven rally also got support from stock specific earning results and Finance Minister Arun Jaitley's statement that the Centre will step up reforms to attract more investment and fill up infrastructure deficit.
Dilip Bhat, joint managing director of the Prabhudas Lilladher group, a financial products agency, talks to Business Standard about the market rally ahead of the elections.
Mirroring the overnight weakness on Wall Street, the Sensex opened 19 points lower at 5,598, and soon slipped to an intra-day low of 5,579. The index is now down 28 points at 5,589.
A large number of successful IPOs ensured that the total investor wealth, measured in terms of cumulative valuation of all listed shares, rose by nearly Rs 6 lakh crore during the year to Rs 106.23 lakh crore
Mirroring the gains at Wall Steet and strong Asian markets, the Sensex opened with a positive gap of 11 points at 5,263. It moved up a tad to touch a high of 5,269, before slipping into negative zone owing to profit-taking.
Ajit Mishra, vice president, Research, Religare Broking, answers your stock market queries.
Sharp fall in capital goods production and manufacturing activity also dented sentiments.
The markets have opened with a positive gap of 16 points at 4,972 ahead of the presentation of the Budget in the Lok Sabha today.
Short-covering and the propping up of net asset values have potential to boost frontline as well as second-rung names next week
The Sensex closed with a gain of 75 points at 4,835. The Nifty ended above the 1,500-mark at 1,508 -- up 24 points.
The market last tumbled 10% or more in December 2016 following demonetisation. The decline was followed by a sharp rebound. This time the chances of such a v-shaped recovery are less.
The Bank of Japan's action has nullified the effects of the end of the US' quantitative easing programme but the dependence of foreign institutional investors remains a concern
It is too early to say if we have seen the "final" bottom to these stocks in August 2013 or if another attempt to test them will be made before or just after elections, says Sonali Ranade.
The broader NSE index has fallen about 0.9% as investors wait for corporate results
Financial shares were the top losers.
In India, however, the Nifty continues to climb a wall of worry as general elections loom, fiscal deficit surges and the current account deficit is barely under control following subdued gold and crude prices, says Sonali Ranade.
Private lenders HDFC Bank and ICICI Bank were the top gainers along with index heavyweights
Sensex, Nifty put up a good show in closing trade.
market rally, especially in mid-caps, has also been driven by a pick-up in the monsoon and the government's resolve to get the goods and services tax (GST) Bill cleared in the recent session of Parliament.
Participants will keenly watch fate of GST Bill in Parliament.
Total assets under management (AUM) for September stood at Rs 20.4 lakh crore compared with Rs 20.6 lakh crore at the end of August.
Only six sectors are likely to report good set of numbers in Q4 FY15.
