The BSE and NSE suspended trading for 45 minutes a little past 9.20 am after the Sensex and Nifty plunged in tandem with global markets as the coronavirus pandemic triggered recession fears.
However, domestic indices surged after trading resumed as investors snapped up recently-battered stocks available at attractive valuations. Expectations of stimulus measures by the US and other countries also buoyed sentiment, analysts said.
Recovering over 5,380 points from its intra-day low of 29,388.97, the BSE Sensex ended 1,325.34 points or 4.04 per cent higher at 34,103.48.
Similarly, the NSE Nifty settled 365.05 points, or 3.81 per cent, up at 9,955.20. It hit an intra-day low of 8,555.15.
Most Sensex components ended with gains. SBI was the top gainer, rallying 13.87 per cent, followed by Tata Steel, HDFC, Sun Pharma, Bharti Airtel, Bajaj Finance and ICICI Bank.
On the other hand, Nestle India, Asian Paints, HUL, Hero MotoCorp and HCL Tech shed up to 4.12 per cent.
During the holiday-shortened week, the Sensex plummeted 3,473.14 points or 9.24 per cent, while the Nifty lost 1,034.25 points or 9.41 per cent.
The benchmarks posted their biggest ever one-day falls in two sessions this week (March 9 and 12).
Investor wealth worth around Rs 15 lakh crore has been wiped off in the past four sessions.
"This week will go down in history as one of the worst weeks for global markets. Consider this, the US market had declined 18 per cent in just the first four days of trading.
"Markets have been battered by the potential economic impact on account of various preventive travel measures by major countries. FPIs sold equities worth USD 2.3 billion over the past five trading sessions while DIIs bought USD 1.8 billion worth of equities in the same period," said Sanjeev Zarbade, VP PCG Research, Kotak Securities.
All sectoral indices ended with gains, with BSE telecom, metal, oil and gas, finance, banking and energy indices rallying up to 6.39 per cent.
Broader midcap and smallcap indices too settled on a positive note.
As per norms, trading is halted for 1.45 hours if there is 15 per cent movement before 1 pm and 45 minutes for such movement between 1 pm and 2 pm.
Geojit Financial Services Chief Investment Strategist V K Vijaykumar said the last time there was a circuit freeze and trading halt was on January 22, 2008.
There was also a brief trading halt on the National Stock Exchange on October 5, 2012 due to a freak trade.
Sebi on Friday said the regulator and stock exchanges are prepared to "take any action" as required to deal with market volatility.
Chief Economic Advisor Krishnamurthy Subramanian also said the government and the RBI will take all necessary steps to quell the "fear sentiment" created due to the coronavirus outbreak.
Meanwhile, official data released after market hours on Thursday showed that India's factory output rose marginally in January, while retail inflation eased to a two-month low in February, paving the way for RBI to cut interest rate to boost growth.
In rest of Asia, Shanghai slipped 1.23 per cent, Hong Kong 1.14 per cent, Seoul 3.43 per cent and Tokyo 6.08 per cent.
Bourses in Europe opened up to 4 per cent higher.
The rupee too witnessed a sharp recovery, appreciating 47 paise to 73.81 per US dollar (intra-day).
Brent crude oil futures surged 5.51 per cent to USD 35.05 per barrel.
The total number of confirmed coronavirus cases in India stood at 75, including 17 foreigners, as per health ministry data.
Around 1,30,000 cases of Covid-19 have been recorded in 116 countries and territories, killing at least 4,900 people. ANS ABMABM