Indian equity shares surged over 1.6 per cent at the closing session on Thursday, rebounding from a near three-week low hit in the previous session, led by gains in companies focused on the domestic economy such as ITC and ICICI Bank on value-buying.

The gains snapped a three-day losing streak and marked the NSE index's biggest single-day rise since October 31.

Sentiment also got a boost after upbeat US employment data and a halt to a slide in oil eased investor concerns about the global economy.

"Sellers are absent in the market. Value-buying coupled with halt in crude oil slide is aiding sentiment," said Deven Choksey, Managing Director at K R Choksey Securities, adding December-quarter earnings would be muted to steady.

The benchmark BSE Sensex surged 365.89 points to end at 27,274.71 and the NSE index Nifty jumped 132.5 points to end at 8,234.60.

Gains were broad-based with the BSE Mid Cap index up 1.82 per cent and the BSE Small Cap index higher by 1.79 per cent.

Among BSE sectoral indices, realty index gained the most by 2.6 per cent, followed by banking 2.07 per cent, FMCG 1.95 per cent and power 1.62 per cent.

Major Sensex gainers were Tata Motors 3.68%, ITC 2.52%, ICICI Bank 2.52%, Hindalco 2.41% and GAIL 2.2%, while the only loser among 30-share Sensex constituents was Reliance -1.47%.

Deutsche Bank has set its year-end target for the BSE index at 33,000, citing rising government investment as a key catalyst in 2015. It had earlier set a target of 29,000 for March 2015.

Early trade

The Nifty and the Sensex opened with a gap up on positive global cues led by banking stocks.

The Nifty opened 89 points up at 8,191, while the Sensex opened 270 points up at 27,179.

Minutes of Fed meet

Markets reacted positively to the minutes of the December 16-17 US Federal Reserve meeting which was released on Wednesday.

In its staff review of the economic situation, in the US, the minutes said: "The information reviewed for the December 16-17 meeting suggested that economic activity was increasing at a moderate pace in the fourth quarter and that labour market conditions had improved further. Consumer price inflation continued to run below the FOMC's longer-run objective of 2 per cent, partly restrained by declining energy prices. Market-based measures of inflation compensation moved lower, but survey measures of longer-run inflation expectations remained stable.''

European stocks

European shares rose sharply on Thursday, tracking gains in the United States and Asia, as retail stocks rallied and the minutes from the Fed's recent meeting reassured investors that it was not in a hurry to start raising rates.

Shares in Britain's biggest grocer Tesco surged 5 per cent, the top gainer in the pan-European FTSEurofirst 300 index, after saying it planned to sell assets and cut hundreds of millions of pounds of costs to fund lower prices in store

Asian stocks

Asian stocks gained after upbeat US employment data and a halt to a slide in oil tempered investor risk aversion, while the euro held near a nine-year low.

Tokyo's Nikkei outperformed its regional peers and gained 1.7 per cent.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 1 per cent. South Korea's KOSPI climbed 1.3 per cent and Australian shares tacked on 0.7 per cent.

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