The benchmark BSE Sensex surged over 201 points to 25,944.93, while the NSE Nifty regained the crucial 7,800-mark in the opening trade of special Muhurat trading session on Wednesday to mark the start of Hindu Samvat Year 2072.
The rise comes a day after the government eased FDI norms in 15 sectors.
The Sensex rebounded by 201.67 points, or 0.78%, to trade at 25,944.93 in the first 15 minutes of trade. The gauge had lost 847.33 points in the previous five sessions.
All the sectoral indices, led by realty, infrastructure, banking and capital goods, were trading in positive terrain with gains of up to 1.93%.
On similar lines, the broad-based National Stock Exchange index Nifty recouped the 7,800-level by rising 64.60 points, or 0.82%, to 7,847.95.
Brokers said the buying activity emerged on expectations of pick up in FDI after the government yesterday pushed ahead with major reforms, relaxing foreign investment rules in 15 sectors such as civil aviation, banking, defence, retail and news broadcasting and eased the process for approval of foreign investment.
Investors and funds open their new accounts on the first session of Samvat year 2072. Meanwhile, the Sensex lost 1,043.97 points, and the NSE Nifty dropped by 212.55 points in Samvat 2071.
The share market remained bearish in the past few sessions on sustained foreign fund outflows, tepid Q2 earnings by blue-chip companies and the defeat of the BJP-led NDA alliance in Bihar assembly elections.