The Sensex was trading higher by 136 points, while the Nifty rallied 41 points in early trade. Shares in Hero Motor Corp gained ground on reports that the company was setting-up a new plant in Andhra Pradesh.
Stocks that gained ground in early trade were Sun Pharma, Tata Steel and Tata Power. Shares in Pharma company Lupin rallied after reports that the company has entered into a long-term strategic partnership with Germany-based biopharmaceutical firm Merck Serono.
Nifty stocks that were weak in trade included Maruti Suzuki, Power Grid and ITC. Mid cap stocks which were badly battered in trade managed to stage a recovery. Among the stocks that gained ground were CESC, India Cements and Biocon.
PSU banking stocks which had also fallen sharply on Tuesday saw some recovery to trade higher. However, Punjab National Bank managed to trade lower.
Bhushan Steel was up once again in trade and was trading with gains of almost 3 per cent.
Meanwhile, most of the Asian markets saw some smart recovery led by the Hong Kong's Hang Sang and the Japanese Nikkei.