The benchmark BSE Sensex reclaimed the 26,000-mark by rising over 406 points, while Nifty closed above the 8,000-level on the back of value buying in blue-chip stocks.
The 30-share index ended higher by 406.34 points to 26,213.44 after moving in range of 26,249.03-25,803.19. The barometer had lost 233.60 points in the previous session.
Also, the 50-share NSE Nifty reclaimed the key 8,000-mark to hit a high of 8,044.65, before closing up at 8,032.85, up by 124.60 points, or 1.58 percent.
Value-based buying at some blue-chip counters, which are heavily over-sold and covering-up of pending short positions by speculators ahead of the December futures and options expiry on Thursday supported the recovery.
European and Asian share prices inched higher today as trading in some of the world`s major financial markets resumed after a Christmas break, with oil and the dollar also rising marginally.