The Bombay Stock Exchange benchmark Sensex rebounded to trade over 112 points up in early trade on Wednesday on fresh capital inflows by foreign funds.
The BSE 30-share barometer, which had lost nearly 125 points in the past two sessions, climbed 112.85 points to 11,010.93 points in early trade with realty, banking, metal and auto-sector stocks leading the recovery.
The wide-based National Stock Exchange's Nifty rose 30 points to 3,395.30 points.
Banking and realty-sector stocks were in a good shape after the Reserve Bank of India announced a cut in key short-term lending and borrowing rates by 25 basis points each in its annual credit policy yesterday.
Buying activity re-emerged following overnight gains on the US markets and expectations that the rally would continue, stock brokers said.
Meanwhile, the US Dow Jones Industrial Average closed 1.63 per cent higher yesterday, while Japan's Nikkei rose 0.15 per cent in early trade today.