They said it was the biggest single day gain for the markets in nearly two years, after a fortnight of sharp losses which saw the benchmark Sensex index slip over 17 percent since record highs in early May.

The 30-share Mumbai stock exchange Sensex fell in morning trade to 10,011.45, before gaining smartly to close 379.91 points up at 10,451.33.

The markets opened cautiously, fell close to the 10,000 level but recovered in afternoon trade on sustained buying in automobile and metal stocks.

Automobiles gained on strong May sales figures while metals rose on expectations of firmer levels next week.

The rupee recovered Friday to 46.1 to the dollar after plunging to three-year lows earlier this week as some banks sold dollars to steady the slide.

Fund managers remained cautious about future market trends.

"We saw some short covering against previous positions. It is too early to say what market trend emerges next week. There is some nervousness yet," said Naresh Garg, chief investment officer with private sector Sahara Mutual Fund.

Losers led gainers 1,803 to 609 on low volumes of 34.97 billion rupees (758 million dollars).

The rupee gained to the dollar at 46.1 from a previous 46.2. It weakened marginally to the euro at 59.14 from 59.

India's largest car maker Maruti rose 87.65 rupees or 12.86 percent to 769.4 rupees following bouyant May sales figures.

Private sector Tata Steel rose 28.5 rupees or 5.84 percent to 517.6 on strong fund buying.