Asian markets were also trading in the green ahead of the second summit between US president Donald Trump and North Korean leader Kim Jong Un in Vietnam.
The 30-share Sensex rose by 256.18 points, or 0.73 per cent, to 36,226.89 in early trade. The gauge had lost 239.67 points Tuesday after India carried out air strikes on a terrorist camp in Pakistan.
All the sectoral indices, led by auto, metal, bankex, FMCG and healthcare, were trading in the green with gains of up to 1.32 per cent.
The broad-based NSE Nifty went up by 70.80 points or 0.66 per cent to 10,906.10.
Prominent gainers that supported the recovery were Yes Bank, Sun Pharma, Bajaj Auto, M&M, Asian Paints, Hero MotoCoprp, Bajaj Finance, Tata Steel, Tata Motors, Maruti Suzuki, Axis Bank, ICICI Bank, SBI, RIL, ONGC, IndusInd Bank, L&T, Coal India and Vedanta Ltd, rising up to 2.83 per cent.
Brokers said continued pumping of investments by foreign funds and fresh spell of buying by domestic investors amid a firm trend at other Asian bourses led the markets higher.
Besides, covering-up of short positions by speculators ahead of February month expiry in the derivatives segment on Thursday, too supported the upside in select stocks, they added.
Foreign institutional investors (FIIs) bought shares worth a net Rs 1,674.17 crore, while domestic institutional investors sold equities to the tune of Rs 720.27 crore Tuesday, provisional data showed.
In the Asian region, Hong Kong’s Hang Seng was up 0.44 per cent, Japan’s Nikkei rose 0.53 per cent and Shanghai Composite Index was up by 0.79 per cent in early trade. Korea’s KOSPI too gained 0.24 per cent. The US Dow Jones Industrial Average ended 0.13 per cent higher in Tuesday’s trade.