Indian shares snapped a two-day losing streak to end nearly 1 per cent higher in a highly volatile day where the stocks recovered from over 1-1/2-year lows led by strong buying in heavyweight Reliance Industries and Infosys.
The broader NSE index ended higher by 52.1 points or 0.69 per cent at 7,562.40 after falling as much as 1.13 per cent earlier.
The benchmark BSE index surged 172.08 points or 0.7 per cent at 24,854.11 after losing as much as 1.19 per cent earlier.
Among BSE sectoral indices, auto index gained the most by 0.89 per cent, followed by IT 0.69 per cent, banking 0.66 per cent and oil & gas 0.63 per cent. On the other hand, capital goods index was down 1.34 per cent, followed by infrastructure 1.24 per cent, power 1.11 per cent and realty 1.04 per cent.
Capital goods stocks such as Larsen & Toubro and BHEL fell on disappointing factory data that came out late on Tuesday.
The Industrial production (IIP) contracted by 3.2 per cent in November — the lowest level in over four years — due to poor performance of manufacturing sector and a sharp decline in capital goods output.
Rising for the fifth straight month, retail inflation or CPI, rose to 5.61 per cent in December, limiting the headroom for the Reserve Bank to lower rate next month.
Top five Sensex gainers were Reliance (+3.09%), Infosys (+3.08%), Tata Motors (+2.65%), M&M (+1.97%) and HUL (+1.32%), while the major losers were Adani Ports (-2.65%), Bharti Airtel (-2.05%), Lupin (-2.01%), TCS (-1.88%) and L&T (-1.85%).
Infosys shares gained on hopes that the valuation gap between the stock and larger rival TCS was closing.
Meanwhile, foreign portfolio investors (FPIs) sold shares worth Rs 540.99 crs yesterday, as per provisional data.
European shares extended the previous session's gains on Wednesday, with better-than-expected Chinese trade data tempering some of the concerns about a slowdown in the world's second largest economy.
The pan-European FTSEurofirst 300 index rose 1.2 percent by 0804 GMT after gaining 1.1 per cent in the previous session.
A report by SMC Global said: "Major Asian markets saw a rebound,showing signs of stabilising, despite lingering headwinds over China and lower commodity prices. Overnight, US stocks ended Tuesday's session with solid gains as oil market continues to dominate investor sentiment.The M2 money stock in Japan was up 3.0 per cent on year in December, the Bank of Japan said - coming in at 921.1 trillion yen. That was shy of forecasts for a gain of 3.3 per cent, which would have been unchanged from the November reading. The M3 money stock was up an annual 2.5 per cent to 1,239.3 trillion yen - also below estimates for 2.7 per cent, which would have been unchanged. The L money stock gained 3.6 per cent on year to 1,637.1 trillion yen, slowing from the 4.0 per cent jump in the previous month. For the fourth quarter, M2 was up 3.3 per cent on year, while M3 gained 2.7 per cent and L climbed 3.9 per cent. For all of 2015, M2 gained 3.7 per cent, while M3 add 3.0 per cent and L was up 4.1 per cent."