Gains by Chinese stocks, a steadier yuan and a recovery in oil prices helped calm frazzled investors on Friday, with the Sensex and the Nifty ending down by nearly 0.5 per cent.
Value-buying in beaten-down stocks also helped lift the market sentiment.
Indian stocks mirrored markets in Asia that moved higher after China suspended its market circuit breaker system and set a firmer midpoint rate for the yuan.
The 30-share BSE index Sensex ended higher by 82.50 points or 0.33 per cent at 24,934.33 and the 50-share NSE index Nifty ended up by 33.05 points or 0.44 per cent to 7,601.35.
Barring capital goods and metal, all other BSE sectoral indices ended in the green. Among them, realty index was up 2.31 per cent, followed by power 2.06 per cent, oil & gas 1.39 per cent and infrastructure 1.25 per cent. On the other hand, capital goods index was down 0.67 per cent and metal 0.06 per cent.
Top five Sensex gainers were Tata Motors (+2.99%), Tata Steel (+1.44%), Infosys (+1.3%), NTPC (+1.27%) and Reliance (+1.24%), while the major losers were Cipla (-2.61%), L&T (2.19%), Bajaj Auto (-1.75%), Coal India (-1.68%) and Adani Ports (-1.23%).
Today's gains will help soothe frayed nerves back home going into earnings season next week when Tata Consultancy Services and Infosys report quarterly results.
"Next week we have numbers (corporate earnings) coming in thick and thin, so markets will look for cues from there," Gaurang Shah, vice-president at Geojit BNP Paribas, said.
A report by SMC Global said: "Asian markets rallied briefly after China opened in positive territory but some major markets were back in the red soon after US stocks sold off and closed near session lows on Thursday as persistent worries about the health of the Chinese economy and a continued slide in commodity prices sent investors for cover. US initial jobless claims fell to 277,000, a decrease of 10,000 from the previous week's unrevised level of 287,000. Economists had expected jobless claims to drop to 272,000. Jobless claims fell less than expected but still pulled back off the nearly six-month high set in the previous week."