The key benchmark indices reversed early losses to rise sharply in afternoon trades led by gains in RIL and a positive opening in European markets. The Sensex jumped 174 points to 16,960 levels and the Nifty gained 1 per cent to trade at 5,035.

On the sectoral front, the BSE oil & gas index rose nearly 1 per cent and the IT index was up 0.5 per cent.

In the Sensex pack, ACC was the biggest gainer. The stock gained 2.8 per cent. HDFC and Hindalco rose more than 2 per cent each. Index heavyweight RIL was also up 1.8 per cent.

Bharti Airtel and Reliance Infra, however, fell over 1.5 per cent each.

Asia stock markets mostly retreated on Friday following a glum session on Wall Street as evidence of a weak economic recovery continued to pile up.

Benchmarks in Tokyo, Sydney and Hong Kong fell half a percent or more while oil lingered under $78 a barrel following a big tumble overnight.