Snapping a two-day fall, the 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 fresh hopes of more economic reforms.
After losing about 350 points in past two sessions, the BSE benchmark index opened around 88 points higher on positive cues.
Within half hour of trading, the Sensex rose to day's high of 18,885.84 as it rose nearly 177 points on the back of buying in banks amid a stronger rupee.
After a round of profit-booking, the 30-share Sensex finally closed at 18,793.36, up 84.38 points or 0.45%.
"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%), Infosys (1.85 %), Sun Pharma (1.62%), Sterlite (1.59%) and HUL (1.46%) helped the index rise. However, Gail (2.77%), Bharti Airtel (1.83%) and Hindalco (1.62%) closed lower.
Stocks of consumer durables, healthcare, IT and FMCG closed with gains while oil&gas were among the major losers.
Describing India's recent reforms initiatives as "very promising", US treasury secretary Timothy Geithner in New Delhi on Tuesday said it would have positive outcomes for the Indian economy.
The 50-share National Stock Exchange index Nifty closed 28.60 points up, or 0.50%, at 5,704.60.
Brokers said there was some activity in some stocks on expectations of good earnings in the upcoming September quarter results with Infosys announcing numbers on Friday.
"We expect Infosys to show a return to growth (4.2% q-o-q) in the September quarter after two quarters of decline," said Barclays Equity Research said.