Benchmark indices surged in trade wiping out losses seen of the past two days, as US Fed Chairperson, Janet Yellen said that it was necessary to adopt a cautious approach on interest rate hikes.
This triggered a rally across Asia and Europe, with the Sensex following. The benchmark indice ended higher by 438 points, while the Nifty gained 138 points in trade.
High beta metal and banking stocks led the rally with Tata Steel, Hindalco and Vedanta among the top gainers in trade.
State Bank of India gained after reports that it has received a letter from Vijay Mallya for settlement of dues.
Oil and gas stocks also saw a spectacular rally with BPCL, HPCL and ONGC among the gainers. Among the few stocks that saw selling pressure were HDFC, Mahindra and Mahindra and Bharti Airtel.
Among the non index stocks, Suzlon saw a spectacular rally, while SUN TV also gained. Lupin which had fallen sharply along with other pharma stocks on Tuesday recovered some lost ground and ended the day higher.
Most PSU banks also rallied, following capex raising plans.New listing Healthcare Global had a bad debut on the bourses with the stock ending 15 per cent lower than its offer price.
Meanwhile, European markets were up almost 1.3 per cent in trade.