Benchmark BSE Sensex on Tuesday rebounded by over 196 points to close at 36,519.96 while NSE Nifty settled above the 11,000 level as oil, metal and PSU stocks rallied after a sharp drop in global crude oil prices.
Sentiment got a boost after global crude oil prices dropped by over 4 per cent on Monday owing to oversupply fears, helping the rupee to strengthen against the dollar, brokers said.
Besides, reports that the finance ministry is likely to infuse about Rs 10,000 crore within a few days in some state-owned lenders including PNB, Corporation Bank and Central Bank of India, to help them meet regulatory capital requirement too accelerated the buying pace, they added.
"Oil & gas, banking and pharma sector stocks stole the show, lifting Sensex to almost a new high," said Manoj Choraria, a Delhi-based NSE broker.
Investors were also awaiting US Federal Reserve Chairman Jerome Powell's first congressional testimony for hints on the pace of interest rate hikes, they added.
After a positive opening, the 30-share Sensex advanced to a high of 36,549.55, but profit booking in heavyweight HUL, ITC and Infosys trimmed its gains.
The barometer touched a low of 36,261.78 before settling at 36,519.96, a gain of 196.19 points, or 0.54 per cent.
The gauge had retreated from record closing level by losing 224.64 points in the previous two sessions.
The 50-share NSE Nifty settled higher by 71.20 points, or 0.65 per cent, at 11,008.05. It shuttled between 11,018.50 and 10,925.60 in day trade.
Vinod Nair, Head of Research, Geojit Financial Services Ltd said, "Market regained 11000 mark, given the strong earnings and benign yield despite rise in inflation. Additionally, drop in oil price and strengthening rupee may contain inflationary pressure. PSU banks outperformed due to prospects of government's recapitalisation plan."
State-run lender SBI emerged as top gainer among Sensex constituents by climbing 2.98 per cent, followed by Sun Pharma 2.97 per cent.
ICICI Bank, Axis Bank, Tata Steel, Tata Motors, M&M, Vedanta Ltd, Hero MotoCorp, Adani Ports, RIL, Asian Paint, Coal India, Maruti Suzuki, Yes Bank, TCS, L&T, Wipro, HDFC Bank and HDFC Ltd also contributed to the upmove, rising by up to 2.70 per cent.
Gains were wide-spread as mid-cap and small-cap indices firmed up by 2.14 per cent and 1.12 per cent respectively as retailers accumulated selective stocks at prevailing attractive levels.
Shares of state-owned HPCL, Indian Oil Corporation, BPCL and ONGC rose up to 6.31 per cent after global crude prices plunged by more than 4 per cent on Monday.
Hindustan Unilever, whose net profit grew 19.17 per cent, succumbed to profit-booking at record levels after some brokerage firms downgraded the stock and emerged the worst performer in the Sensex kitty, plunging 4 per cent.
Bharti Airtel declined by 1.14 per cent while ITC dropped 0.63 per cent. Profit booking in Infosys after recent gains also ended its dream run and it settled down by 0.42 per cent.
Globally, Brent crude dipped below the USD 72-mark, to quote at USD 71.67 a barrel, while WTI slipped to USD 66.89 a barrel.
Aviation stocks such as InterGlobe Aviation and Spicejet climbed up to 2.02 per cent as declining oil prices are beneficial for this sector which would reduce fuel bill burden.
Sectorally, BSE PSU rose the most by 2.32 per cent followed by oil&gas 2.19 per cent, metal 1.91 per cent, energy 1.84 per cent, infrastructure 1.44 per cent, bankex 1.43 per cent, healthcare 1.26 per cent, auto 1.26 per cent, consumer durables 1.02 per cent, power 1.01 per cent and capital goods 0.91 per cent.
Stock of private sector lender Federal Bank climbed 19.16 per cent after the company registered a 25 per cent increase in its net profit at Rs 262.71 crore for first quarter of the current fiscal despite rise in bad loans.
Elsewhere, Asian markets were mostly mixed, while European markets were trading flat in their opening trade.
In the Asian region, Japan's Nikkei rose 0.44 per cent, Singapore up 0.21 per cent, while Hong Kong's Hang Seng down 1.25 per cent and Shanghai Composite Index shed 0.57 per cent.
In the euro zone, Frankfurt's DAX rose 0.16 per cent, while Paris CAC down 0.36 per cent in their morning session. London's FTSE fell 0.03 per cent.