The benchmark BSE Sensex recovered over 500 points to cross 26,000 level in early trade while NSE Nifty reached 7,943.75 points on short covering by participants on expiry of derivatives contracts and strong global cues.
The 30-share barometer spurted by 507.15 points or 1.97 percent, to 26,170.39. Yesterday, it had lost 317.72 points.
Besides, value-buying in realty, healthcare,, auto, metal, banking, PSUs capital goods and oil and gas stocks positively impacted trading sentiment.
The NSE Nifty regained the 7,900-mark by surging 151.90 points , or 1.95 percent to 7,943.75.
Brokers said short covering by participants as today being the last trading session of August contracts in the derivatives space supported the market.
A firming trend at other Asian bourses following overnight gains in the US market after hints the US Federal Reserve will not raise interest rates next month sparked a rally on domestic bourses, they said.
At 0945 hrs, the BSE Sensex was trading at 25,964.12 points, up by 249.46 points or 0.97 per cent over the previous close.
The 50-share Nifty was up by 74.65 piints, or 0.96 per cent, at 7,866.50 with Vedanta Ltd and HDFC leading the rally.
Among other Asian markets, Shanghai composite Index up 1.12 per cent, Hong Kong's Hang Seng firmed up 2.45 per cent while Japan's Nikkei higher by 1.89 per cent in early trade today.
The US Dow Jones Industrial Average ended 3.95 per cent higher in yesterday's trade.