Equity benchmark indices Sensex and Nifty rebounded sharply on Thursday after sliding for the past two sessions, propelled by bargain hunting in capital goods, banking, and IT stocks amid a sharp correction in global crude prices.

An encouraging PMI data further bolstered sentiment, even as relentless foreign capital outflows trimmed gains, traders said.

The 30-share BSE Sensex climbed 405.53 points or 0.62 per cent to settle at 65,631.57. During the day, it rallied 527.16 points or 0.80 per cent to 65,753.20.

Nifty advanced 109.65 points or 0.56 per cent to end at 19,545.75.

"The positive signal from the PMI data and the correction in the crude price boosted the market sentiment. While regarding RBI policy, positively, the market expects the interest rate to be hold-on as external demand outlook indicates muted trend fearing disinflationary trend in the future," said Vinod Nair, Head of Research at Geojit Financial Services.

Larsen & Toubro was the biggest gainer in the Sensex pack, rising 2.35 per cent, followed by Titan, Tata Consultancy Services, Maruti, Mahindra & Mahindra, Infosys, ICICI Bank and Asian Paints.

In contrast, Power Grid, Nestle, NTPC, HCL Technologies and Bajaj Finance were among the laggards.

In the broader market, the BSE smallcap gauge climbed 0.59 per cent and the midcap index dipped 0.03 per cent.

Among the indices, capital goods jumped 1.31 per cent, services climbed 1.03 per cent, IT (0.98 per cent), industrials (0.95 per cent), consumer discretionary (0.93 per cent), teck (0.83 per cent) and auto (0.81 per cent).

FMCG, telecommunication, utilities and metal were the laggards.

"Global markets steadied on Thursday rebounding from previous losses after a strong lead from Wall Street. A plunge in oil prices and softer U.S. labour data late on Wednesday helped bring US Treasury yields back down from 16-year highs," Deepak Jasani, Head of Retail Research, HDFC Securities, said.

In Asian markets, Tokyo and Hong Kong settled in the green, while Seoul ended lower. Trading was closed in Shanghai for a holiday.

European markets were trading on a mixed note. The US markets ended in positive territory on Wednesday.

Global oil benchmark Brent crude declined 0.89 per cent to USD 85.05 a barrel.

"Recovery in global markets followed by a sharp drop in international crude oil prices and steady trend in US bond yields triggered a relief rally in domestic shares after two sessions of losses. Buying in IT, banking, auto and capital goods stocks led the upsurge, whereas selective profit-taking in metals, and power stocks trimmed gains of key benchmark indices.

"Despite the rebound, uncertainty over more rate hikes going ahead coupled with slackening demand and recessionary fears would mean that markets are likely to witness strong bouts of intra-day volatility with a slightly negative bias in the near to medium term," Shrikant Chouhan, Head of Research (Retail), Kotak Securities Ltd, said.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 4,424.02 crore on Wednesday, according to exchange data.

"Though the market bounced back today, uncertainty persists, which would keep the Nifty range bound. Investors would watch out for US weekly jobless claims that would be released late today. Also, the release of US non-farm payroll data, along with the RBI policy outcome tomorrow would be key events to watch out for," Khemka said.

The BSE benchmark declined 286.06 points or 0.44 per cent to settle at 65,226.04 on Wednesday. Nifty slipped 92.65 points or 0.47 per cent to end at 19,436.10.

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