The markets had shed more than 4% in past four consecutive sessions.
Stock markets closed higher on Wednesday, after four consecutive days of fall, as the rupee touched a three-week high amid falling crude oil prices.
The Sensex rose 186 points to regain the 34,000 mark, which it had lost for the first time in past six months the previous day.
NSE benchmark index Nifty settled 77 points higher at 10,224.
Gains in financial services and metal stocks pushed the markets higher, however some losses in pharma stocks limited the upside.
Short-covering ahead of expiry of derivatives (futures options contracts) helped the markets reverse direction, say analysts.