The Nifty closed higher by 106 points. Markets opened the day extremely weak after Fed Minutes were made known and on fears of QE tapering, but recovered on sharp gains in Europe and a recovering rupee.
Among the top gainers in the Nifty were the metal stocks which rallied on hopes that a falling rupee would improve prospects.
Tata Steel rallied 10 per cent, while Jindal Steel jumped 4 per cent and Sesa Goa ended the day with gains of 12 per cent.
Among the other stocks that rallied in trade were heavyweights were Reliance Industries, Tata Motors, Bharti Airtel and Cairn India. Ranbaxy was the best performing stock in the Nifty jumping more then 16 per cent.
Banking stocks, however, failed to lend any support to the markets with shares of ICICI Bank, HDFC Bank and IndusInd Bank and Yes Bank all dropping sharply in trade.
In fact, Yes Bank which had shown some resilience in trade on Tuesday ended the day sharply lower by 5 per cent.
Oil marketing companies and ONGC led the rally in trade today on hopes of a sharp increase in diesel prices. Among the notable gainers from the space were BPCL, HPCL and ONGC.
Meanwhile, markets in Asia closed the day sharply lower following fears of QE tapering and a rout on emerging market currencies. However, Europe was trading higher after upbeat data from Germany.