The BSE Sensex snapped its three-day losing streak, recovering over 223 points in early trade on Monday, on emergence of buying by funds.
Brokers said a firming trend in other Asian bourses, after US markets hit another record high on Friday, also buoyed the trading sentiment on Dalal Street.
Besides, expectations of a drop in import bill after crude oil prices fell in the overseas markets, following a key deal between world powers and Iran on its controversial nuclear programme, also triggered buying activity, they said.
The 30-share index of the Bombay Stock Exchange, which had lost nearly 674 points in the previous three sessions, recovered 223.26 points, or 1.10 per cent, to 20,440.65.
The 50-share National Stock Exchange Nifty moved up by 68.75 points, or 1.15 per cent, to 6,064.20.
Stocks of banking, realty, oil and gas and FMCG sectors led the recovery.
Stocks of state-run oil marketing companies too rose. Indian Oil shares gained 1.99 per cent to Rs 204.70. Hindustan Petroleum rose 4.25 per cent to Rs 211 and Bharat Petroleum gained 2.68 per cent to Rs 341.60.
Reliance Industries shares also gained 1.27 per cent to Rs 854.65.
In other Asian markets, Japan's Nikkei index rose by 1.36 per cent while Hong Kong's Hang Seng gained 0.56 per cent in early trade on Monday.
The US Dow Jones Industrial Average had surged to yet another high by gaining 0.34 per cent on Friday.