Logging its biggest rise in over a month, the benchmark BSE Sensex on Friday surged by 506 points to 27,105.39 points on government's move to mollify overseas investors' taxation worries and rupee's recovery.
Firm global stocks tracking UK election result, fall in Brent oil prices, value-buying in domestic beaten-down stocks helped Sensex recover from 6-1/2 months low, traders said.
On weekly basis, the 30-share Sensex recovered by 94.08 points or 0.35%, to snap three weeks of losses.
"Sentiments got some support with finance minister Arun Jaitley announcing a high level committee, which will give its recommendations on the issue of imposition of MAT on foreign investors," Jayant Manglik, President of retail distribution at Religare Securities said.
Snapping three days of losses, the BSE Sensex resumed on a strong footing and quickly recaptured the crucial 27,000-mark to touch the day's high of 27,196.28.
It finally closed at 27,105.39, a jump of 506.28 points or 1.90%. Previously, it had soared by 517.22 points on March 30.
The gauge had lost 891.48 points in the previous three days to hit 6-1/2 months low on persistent worries over MAT and delay in passage of key reforms bills in Parliament.
The 50-share NSE Nifty after crossing the 8,200-mark, touched a high of 8,224.95 before closing 134.20 points or 1.67% higher at 8,191.50.
Government's move over MAT issue could reduce FII's concerns over the medium term, traders added.
Tata Motors, topped the gainer list from the Sensex pack with a rise of 5.18% after the company raised Rs 9,040.56 crore from its right issue.
The automaker was followed by Cipla, ICICI Bank, Hindalco, Bajaj Auto, HDFC Bank, HDFC, Axis Bank, RIL, Tata Power, L&T and ITC. Share of FMCG major Hindustan Unilever rose 3.34% after it reported a 16.73% increase in its standalone net profit at Rs 1,018.08 crore for the March quarter.
Bucking the trend, Hero MotoCorp was down 2.23% after it reported a 14.05% decline in its net profit.
Thursday's battered banking stocks were in the limelight with ICICI Bank, HDFC Bank, Axis Bank and SBI adding about 180 points in total to the Sensex kitty.
Meanwhile, Foreign portfolio investors sold shares worth Rs 1,360.69 crore on Thursday, as per provisional data.
"Surprise victory of David Cameron's Conservative Party in the UK elections has further lifted sentiments," said Jignesh Chaudhary, Head of Research at Veracity Broking Services.
Overseas, Asian stocks closed mixed on signs of global bond markets stabilising after a big sell-off in the past few days.
Key indices in China, Hong Kong, Japan and Singpaore ended up by 0.45 to 2.28% while indices in South Korea and Taiwan moved down between 0.12 and 0.26%.
European markets were trading higher as key indices in France, Germany and the UK firmed up by 0.70% to 0.82%.
Turning to the domestic market, other gainers on the Sensex were ICICI Bank with a rise of 4.09%, Cipla 4.03%, Hindalco 3.50%, HUL 3.34%, HDFC Bank 3.26%, Bajaj Auto 3.02%, Axis Bank 2.80%, HDFC 2.66% and RIL 2.36%.
Among the BSE sectoral indices, realty rose by 4.06%, auto 2.67%, bankex 2.23%, healthcare 1.76%, consumer goods 1.76%, FMCG 1.59% and refinery 1.16%, while consumer durables dropped by 1.60%.
The market breadth turned positive as 1,871 stocks ended with gains, 823 stocks finished in the red, while 124 ruled steady.
The total turnover moved down to Rs 2,960.28 crore from Rs 3,182.30 crore on Thursday.