Global benchmark, Brent Crude, declined slightly amid no major escalation in tension between the US and Iran. The Brent was trading around $68 a barrel.
"Stability in crude oil prices and currency seem to have provided temporary relief to investors. Nonetheless, geo-political developments would still be one of the key factors on investors' radar, as any further escalation would have an adverse impact on markets and the economy," said Ajit Mishra, VP - Research, Religare Broking
Mishra added that the market participants would look forward to Q3 earnings and macro data scheduled in the coming sessions. Given the current set-up, the benchmark indices are expected to be volatile in the near term.
Sensex closed 193 points higher at 40,869.47 after hitting an intra-day high of 41,230.14 and a low of 40,727.37. The broader Nifty settled at 12,052.95, gaining 59.90 points.
Vinod Nair of Geojit Financial Services: "Iran is under pressure from world leaders not to escalate the issue further. Due to ease in tension in the Middle East, market recovered from yesterday's losses. Oil prices cooled as Iran a major crude exporter stayed away from retaliation".
Ultratech Cement was the top gainer on the BSE followed by HDFC Bank, Reliance Industries, Sun Pharma and NTPC advancing in the range of 1 to 2 per cent. The top laggards were: Infosys, ICICI Bank, Bharti Airtel, Nestle and HeroMotoCorp.
( With inputs from IANS )