The BSE Sensex moved up 195 points to 18,531 as investors welcomed assembly results on Friday which showed support for UPA government's alliance partners, notably Mamta Banerjee-led TMC's routing the Left in West Bengal, and picked up stocks at lower levels.
Brokers said the results in three of the four states showed that the Congress-led UPA government at the centre was still in favour, indicating that economic reforms may pick up pace in the country in the coming months.
Some said, however, that the impact of the victory on economic reforms was yet to be seen.
The 30-share Bombay Stock Exchange index, Sensex, which had lost 249 points on Thursday, bounced back 195.49 points to close at 18,531.28.
Intra-day, the gauge touched a high of 18,724.54 but fell on profit-booking.
Brokers said trading sentiment improved after results showed that Congress ally TMC has finally ended the 3-decade rule of Communists in West Bengal elections.
They said investors bought fundamentally strong stocks, which were available at attractive prices after the recent market dips,especially in FMCG, metals and healthcare sectors.
Similarly, the broad-based National Stock Exchange index Nifty rose 58.60 points to 5,544.75. It touched 5,605 points level during the session.
FMCG index was the best performer and added 2.35% at 3,803.26.
The metals sector was the second, rising 1.48% to 15,404.23, as Hindalco Industries, a leading aluminium producer, gained 1.54% to Rs 198.30, recovering from yesterday's steepest drop in three months.
As buying spread over a broader front, the midcaps sector index rose by 0.85% to 6,902.58 and smallcaps index by 0.39% to 8,368.22.