At Closing, Sensex was up 363 points or 0.45 per cent at 80,369 and Nifty 50 was up 127 points or 0.52 per cent at 24,466.

Banking stocks drove a rally. Nifty Bank was up 1,061 points or 2.07 per cent at 52,320.

The broader markets outperformed the Nifty 50. Nifty midcap 100 index was up 514 points or 0.92 per cent at 56,251 and Nifty smallcap 100 index was up 136 points or 0.76 per cent at 18,198.

Among the sectoral indices, PSU Bank, financial services, metal, realty, energy, pvt bank, PSE and services were major gainers. Auto, IT, Pharma, FMCG and consumption were major laggards.

In the Sensex pack, SBI, ICICI Bank, NTPC, Bajaj Finserv, Bajaj Finance, L&T, Axis Bank, HDFC Bank, ITC, Power Grid and Kotak Mahindra Bank were top gainers. Maruti Suzuki, Tata Motors, Sun Pharma, Bharti Airtel, IndusInd Bank, M&M, Infosys and JSW Steel were top losers.

Vikram Kasat, Head - Advisory, PL Capital - Prabhudas Lilladher said, "Markets recovered in the second half of the trading session, closing in the green for the second consecutive day and keeping the festive cheer alive."

"Private and PSU banks, along with other financial services stocks, led the rally, with these indices gaining over 2 per cent. However, the pharma and auto indices experienced profit booking and closed in the red. While FIIs have pulled out nearly Rs 1.03 lakh crore from Indian equities in October alone, strong domestic institutional inflows are acting like a floor for markets with net purchases worth Rs 98,491 crore,” they added.

The equity market opened weak. Sensex was trading at 79,660, after falling 344 points or 0.43 per cent. Nifty was trading at 24,257, down 81 points or 0.30 per cent in the morning session.