Fresh dollar selling by exporters and some banks amid some weakness in dollar overseas also aided the rupee rise.
At the Interbank Foreign Exchange (Forex) market, the domestic currency resumed firm at 52.70/71 a dollar from last close of 52.87/88 and immediately touched a low of 52.80.
However, sharp rise in local stocks boosted the rupee sentiment and it bounced back to a high of 52.44 before ending at 52.50/51, a gain of 0.70 per cent.
After plunging by 827.52 points or 5.17 per cent in last five sessions, the Indian benchmark today shot up by 510.13 points or 3.36 per cent.
The dollar index, a gauge of six major currencies, was down by nearly 0.05 per cent while New York crude oil was trading below $97 a barrel in European market on Wednesday.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said, "Indian equity markets closed strong by over three percent which appreciated Rupee. Dollar demand from oil importers, however, restricted the Rupee gain."
"Looking at the global scenario one can expect Rupee to trade near 52.00 levels in coming days and the trading range for the Rupee will be 52.25 to 53.00 on Thusday," he added.