Mumbai: Domestic stocks, which fell in early trade in a knee-jerk reaction to Greece's 'no' to euro zone bailout conditions, rebounded handsomely in late-afternoon trade, with the benchmark Sensex rallying 115.97 points to end at 28,208.76.
The 50-share Nifty recaptured the crucial 8,500-level.
Financial markets slipped into a bit of a turmoil after Greek voters overwhelmingly rejected the bailout package from the country's creditors, which set off panic among investors here.
"Indian markets are resilient against Greece crisis. Furthermore, strengthening of the rupee and renewed buying interest of foreign portfolio investors boosted sentiment to shut the day on a firm note," said Gaurav Jain, Director, Hem Securities.
The 30-share Sensex started off sharply lower at 27,857.2 and swayed between 27,774.8 and 28,235.31 before ending at 28,208.76, a gain of 115.97 points, or 0.41 percent.
The broader Nifty, too, climbed 37.25 points, or 0.44 percent, to settle at 8,522.15.
The major index gainers included Dr Reddy's (3.64 percent), Cipla (3.35 percent), HeromotoCorp (1.34 percent), TCS (1.37 percent) and Lupin (1.05 percent).
The key losers were Vedanta (down 4.45 percent), Hindalco (1.36 percent), NTPC (0.76 percent), Tata Steel (0.73 percent) and Infosys (0.65 percent).
Of the 30-share Sensex pack, 19 ended in the green while 11 finished lower.
The key indices staged a remarkable turnaround towards late-afternoon deals, driven by value buying in frontline blue chips and some bouts of short-covering.
Investors also factored in positive comments from policy makers and solid macro data as the government's decision for higher spending to propel the economy did the trick, a broker said.
"...Indian equity market continues to outperform despite increased global risks in the last couple of weeks. The likely increase in government spending, a possible rate cut and fair numbers for Q1 FY16 are providing hope for Indian markets," said Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services.
Broader markets such as small-cap and mid-cap indices rose 1.09 percent and 0.85 percent, respectively.
Stocks of oil marketing companies rallied for the second straight day as lower crude prices fuelled the climb.
Sectorally, healthcare stole the show, surging over 1.66 percent, followed by by oil and gas (1.10 percent) and realty (0.74 percent).
However, consumer durables, metal and technology counters came under some amount of selling pressure.
Foreign portfolio investors (FPIs) net bought shares worth Rs 356.29 crore last Friday, according to provisional data.
The market breadth remained strong as 1,792 stocks advanced, 1,004 declined and 146 ruled steady.
Elsewhere in Asia, barring China, most Asian markets saw heavy selling while European markets traded lower.
