Snapping a two-day fall, the BSE Sensex on Tuesday rose by 84 points to end at 18,793.36 on good buying in Infosys, L&T and ICICI Bank shares amid mixed global cues.
After losing about 350 points in the past two sessions, the BSE benchmark index opened 88 points up on positive trends.
Within half hour of trading, the Sensex rose to a day's high of 18,885.84, up nearly 177 points, on the back of buying in banks amid a stronger rupee.
Sustained FII inflows drove the upsurge, said dealers.
After a mild round of profit-booking and mixed trading in European stocks, the 30-share Sensex closed at 18,793.36, up 84.38 points or 0.45 per cent.
"While buying in IT and FMCG sector supported the upsides. Lower opening of European indices as well as weaker US Futures also muted the upward movement," said Nidhi Sarswat, Senior Research Analyst, Bonanza Portfolio.
Overall, 19 stocks led by L&T (2.06 per cent), Infosys (1.85 per cent), Sun Pharma (1.62 per cent), Sterlite (1.59 per cent) and HUL (1.46 per cent) helped the index rise. However, Gail (2.77 per cent), Bharti Airtel (1.83 per cent) and Hindalco (1.62 per cent) closed lower.
Stocks of consumer durables, healthcare, IT and FMCG closed with gains while oil&gas were among the major losers.
In New Delhi, describing India's recent reforms initiatives as "very promising", US Treasury Secretary Timothy Geithner on Tuesday said it would have positive outcomes for the Indian economy.
Market participants appeared to ignore reports that International Monetary Fund has slashed India's growth forecast to 4.9 per cent for 2012 from a earlier projected growth rate of 6.1 per cent due to low business confidence and "sluggish structural reforms".
The 50-share National Stock Exchange index Nifty closed 28.60 points up, or 0.50 per cent, at 5,704.60.
Brokers said there was activity in select scrips on hopes of better-than-expected earnings in September quarter results with Infosys announcing numbers on Friday. "We expect Infosys to show a return to growth (4.2 per cent q-o-q) in Sept quarter after 2 quarters of decline," said Barclays Equity Research said.