Markets made a solid comeback from one-year lows as the benchmark BSE Sensex rebounded 291 points after the government said it's considering reconvening a special session of Parliament to ensure the passing of the stalled GST Bill.
The Bill could not go through in the last session due to a logjam in Parliament. Brokers said sentiment got a lift after the government made its intention clear to reconvene the Monsoon Session to pass key reform bills, including GST.
The BSE Sensex started the session higher, hitting a high of 26,124.83, but fell victim to the selling pressure as China equities lost over 7%.
Finally, it ended the day higher by 290.82 points, or 1.13%, at 26,032.38.
In the previous three sessions, the index lost 2,190.08, including the seventh biggest fall on Monday with the sensex plummeting 1.624.51 points.
The broad-based NSE Nifty too covered up some lost ground, up 71.70 points, or 0.92%, to end Tuesday at 7,880.70.
Intra-day, it moved between a high of 7,925.40 and a low of 7,667.25.
Value-buying in realty, metals and banking stocks gave the recovery a leg-up.
Even short-covering by traders helped. There was a turnaround in rupee's fortunes as well, which closed 55 paise higher at 66.10 a dollar, which contributed to the improved sentiment, brokers said.
Market volatility remained high in view of expiry of August derivatives contracts on Thursday. "Markets went into the oversold zone which led to short covering, triggering today's rise.
Appreciation in the rupee and bounceback in global equities too added to the momentum," said Gaurav Jain, Director, Hem Securities.
Of the 30 Sensex stocks, 22 gained, with Vedanta staying on top. Tata Motors, Coal India and ICICI Bank advanced. Except IT, all BSE sectoral indices added to the gains led by realty, banking, metal, oil and gas and PSU. Mid-cap and small-cap indices got on to a positive trajectory, rising up to 1.99%.
Most Asian markets closed mixed, with China's Shanghai Composite sliding 7.63%. European equities were ruling higher in their opening trade.