The BSE benchmark Sensex on Friday rebounded nearly 200 points and the NSE Nifty reclaimed the 10,700 mark, driven by recovery in auto, metal and banking stocks amid buying by domestic institutional investors.
The 30-share index, however, pared some early gains and was trading 103.90 points, or 0.29 per cent, higher at 35,617.61.
Similarly, the NSE Nifty rose 37.15 points,or 0.35 per cent, to 10,709.40.
On Thursday, the Sensex had tumbled 377.81 points, or 1.05 per cent, to end at 35,513.71; and the broader NSE Nifty plunged 120.25 points, or 1.11 per cent, to 10,672.25.
The biggest gainers in the Sensex pack include HDFC duo, ITC, Axis Bank, Infosys, Tata Motors, HUL, SBI and Bharti Airtel, rising up to 3 per cent.
Among the losers were ICICI Bank, HCL Tech, TCS, RIL and Sun Pharma, slipping up to 1 per cent.
According to Sunil Sharma, Chief Investment Officer, Sanctum Wealth Management, the domestic market has remained resilient in the face of worrisome news over the past three months.
"With low and falling inflation expectations, should growth disappoint, we would expect the RBI to deliver a rate cut in Q4 FY19.
"An accommodative central bank, low inflation, strong credit growth and low crude remain four key macro pillars backstopping the Indian markets," he said.
On a net basis, foreign portfolio investors (FPIs) sold shares worth Rs 972.81 crore Thursday, while domestic institutional investors (DIIs) were net buyers to the tune of Rs 34.52 crore, provisional data available with BSE showed.
Elsewhere in Asia, Hong Kong's Hang Seng was up 1.22 per cent, Kospi gained 0.55 per cent and Shanghai Composite Index was trading 1.81 per cent higher in early trade.
Japan's Nikkei, however, cracked 3.03 per cent after it resumed trading after New Year holiday.
On Wall Street, Dow Jones Industrial Average plunged 660.02 points, or 2.83 per cent, to 22,686.22 points.
The rupee, meanwhile, strengthened against the US dollar and opened at 69.95.
The benchmark Brent crude futures were trading marginally lower at USD 55.93 per barrel.