Investor sentiment in Asia improved in anticipation of a revival in demand from the economic giant, traders said.
After rallying 1,481.63 points, the BSE barometer gave up some gains to trade 443.27 points or 1.71 per cent higher at 26,424.51.
Similarly, the NSE Nifty was trading 165.55 points, or 2.18 per cent, up at 7,775.80.
Top losers in the Sensex pack included IndusInd Bank, Titan, L&T, Tata Steel, Asian Paint and ICICI Bank, while HCL Tech, HUL, Infosys and Tech Mahindra were the gainers.
In the previous session, the BSE benchmark plummeted 3,935 points or 13. 15 per cent to close at 25,981.24, while the NSE barometer Nifty cracked 1,135.20 points or 12.98 per cent to settle at 7,610.25.
According to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the US Fed is now leading from the front with its historic package which includes open-ended purchase of securities, direct loans to companies, purchase of corporate bonds, lending against student loans and credit card loans.
The Federal Reserve announced it will buy unlimited amounts of US Treasury debt -- essentially printing money for the economy -- as well as new steps to lend directly to small- and medium-sized companies that have been among the hardest-hit as economic activity dries up.
"This comprehensive package for the wall street and the main street is unprecedented and gives the message that the world's largest central bank will "do whatever it takes" to mitigate the economic crisis.
"Other central banks can be expected to follow suit with bold measures to ease the severely strained credit and financial markets," he said.
A major package from the government of India and the Reserve Bank can be expected shortly, he stated, adding that the market is likely to remain hugely volatile with rising possibility of V shaped recovery occasionally.
"However, the calamity facing humanity is enormous," he said.
As per traders, extreme lockdown measures taken by the government of India and authorities across the world has put immense pressure in investor sentiment.
Bourses in Shanghai, Hong Kong, Tokyo and Seoul rallied up to 7 per cent.
Stocks on Wall Street, however, ended with losses after Fed announcement.
Incessant foreign fund outflow also kept domestic market participants risk-averse, traders said.
On a net basis, foreign institutional investors sold equities worth Rs 2,989.29 crore on Monday, data available with stock exchanges showed.
Meanwhile, the rupee appreciated 15 paise against the US dollar to 76.05 (intra-day).Global crude benchmark, Brent crude futures rose 2.96 per cent to USD 27.83 per barrel.
The total number of Covid-19 cases in India stood at 492 on Tuesday morning, as per health ministry log.As cases of the viral infection surged in the past few days, authorities have put almost the entire country under lockdown, banning gathering of people and suspending road, rail and air traffic till March 31.
The number of global Covid-19 infections has shot past 3,80,000. Worldwide fatalities topped 16,500. ANS ANSANS