The BSE Sensex surged over 350 points reversing early declines, while the broader Nifty benchmark edged above the key 5,400 levels in afternoon trade on Thursday.
The rupee also pulled back below the 65 to the dollar mark after earlier hitting a low of 65.56.
The gains came on the back of strong buying in metal and energy stocks, which rose tracking signs of stabilization in the world's second-largest economy. Data showed that China's vast manufacturing sector hit a four-month high in August.
Sesa Goa was among the top Nifty gainers, rising over 7 per cent, while Tata Steel jumped over 6 per cent. State run ONGC traded with over 5 per cent gains.
The BSE Metal index rose over 5 per cent, while the energy benchmark traded 3 per cent higher. Banking stocks, which dropped over 1 per cent in early trades, recovered to support the broader markets.
European stocks also opened higher supporting sentiments after the Federal Reserve's July policy minutes, published late night, showed the U.S. central bank was on track to start tapering stimulus as early as next month.
Traders said markets are oversold with the Sensex falling around 1,400 points in the last four sessions. Some analysts like Manish Sonthalia of Motilal Oswal AMC told NDTV that valuations are attractive so there is a case for buying stocks.
"There is panic in markets, but there is a case of buying at lower levels rather than selling at current levels," he added.
Traders said as long as the rupee continues to slide, there will be uncertainty in the markets. The weakening rupee not hits corporate profits, especially for companies with foreign currency loans and those that are dependent on imports, but is also likely to spark inflation and consequently higher rates, ultimately weighing on economic growth.
The Sensex traded 305 points higher at 18,210, while the Nifty advanced 80 points at 5,383 as of 1.22 p.m.
The rupee also pulled back below the 65 to the dollar mark after earlier hitting a low of 65.56.
The gains came on the back of strong buying in metal and energy stocks, which rose tracking signs of stabilization in the world's second-largest economy. Data showed that China's vast manufacturing sector hit a four-month high in August.
Sesa Goa was among the top Nifty gainers, rising over 7 per cent, while Tata Steel jumped over 6 per cent. State run ONGC traded with over 5 per cent gains.
The BSE Metal index rose over 5 per cent, while the energy benchmark traded 3 per cent higher. Banking stocks, which dropped over 1 per cent in early trades, recovered to support the broader markets.
European stocks also opened higher supporting sentiments after the Federal Reserve's July policy minutes, published late night, showed the U.S. central bank was on track to start tapering stimulus as early as next month.
Traders said markets are oversold with the Sensex falling around 1,400 points in the last four sessions. Some analysts like Manish Sonthalia of Motilal Oswal AMC told NDTV that valuations are attractive so there is a case for buying stocks.
"There is panic in markets, but there is a case of buying at lower levels rather than selling at current levels," he added.
Traders said as long as the rupee continues to slide, there will be uncertainty in the markets. The weakening rupee not hits corporate profits, especially for companies with foreign currency loans and those that are dependent on imports, but is also likely to spark inflation and consequently higher rates, ultimately weighing on economic growth.
The Sensex traded 305 points higher at 18,210, while the Nifty advanced 80 points at 5,383 as of 1.22 p.m.
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