The BSE Sensex clawed back into green on Monday after Finance Minister Pranab Mukherjee deferred the general anti-avoidance rules (GAAR) by a year and said the burden of proving tax evasion will lie with the authorities rather than with overseas investors.
In a day of volatile trading, the 30-scrip index of the Bombay Stock Exchange (BSE), after falling 318 points in early trade, closed 81.63 points or 0.48 per cent higher at 16,912 from its previous close at 16,831.08.
The Sensex, which opened in the red at 16,620.44 points, touched a high of 16,944.13 and low of 16,513.77 in intra-day trade. The Sensex midcap was up 31.78 points and the smallcap rose by 20.09 points.
The wider 50-scrip S&P CNX Nifty of the National Stock Exchange, which slipped below the crucial 5,000 mark, also ended 0.54 per cent or 27.30 points up at 5,114.15.
The sectoral indices rebounded mostly towards the end of the trade.
Banking stocks, which had slumped a week after the Reserve Bank of India (RBI) announced guidelines for implementation of the Basel III norms, rebounded after Mukherjee spoke in Parliament.
The BSE banking index closed at 11,374.31, up 90.28 points. The country's largest lender, State Bank of India (SBI) was up by 1.63 per cent at Rs 2,026.15. Private lender ICICI Bank's scrip closed 1.65 per cent up at Rs 847.70.
The metals index closed up 166.05 points and the auto index gained 123.02 points.
Stock of major auto companies closed the day higher. Maruti Suzuki was up 2.46 per cent at Rs 1,314.70. And so were Tata Motors, up 2.29 per cent at Rs 308.30, Bajaj Auto, up 0.91 per cent at Rs 1,515.45, and Mahindra and Mahindra, up 0.47 per cent at Rs 691.10.
There were 19 gainers in the 30-scrip Sensex. These included BHEL, up 6.12 per cent at Rs 227.20, L&T, up 4.79 per cent at Rs 1,202.90, DLF, up 4.34 per cent at Rs 189.75, Jindal Steel, up 3.54 per cent at Rs 501.20 and Tata Steel, up 1.86 per cent at Rs 441.60.
Titan Industries and Gitanjali Gems gained 1-2 per cent after the finance minister withdrew levy on all branded and non-branded jewellery.
Among major Sensex losers were Reliance Industries, down 1.53 per cent at Rs 715.30, Hero MotoCorp, down 1.21 per cent at Rs 1,956.95, Hindustan Uniliver, down 1.17 per cent at Rs 429.80, HDFC Bank, down 0.86 per cent at Rs 532.15 and Wipro, down 0.71 per cent at Rs 411.95.
Earlier, Asian markets that closed with deep cuts following the political changes in France and Greece weighed on investors.