Firm buying in healthcare, FMCG, auto, financial and technology counters supported the recovery, but selling in index-heavyweights Infosys, which got its first outsider CEO in Vishal Sikka, Bharti Airtel and ICICI Bank capped gains.

At 10:10 AM, the 30-share Sensex was up 18 points at 25,601 and the 50-share Nifty was up 4 points at 7,660.

On the global front, the euro came under mounting pressure on Wednesday as the European Central Bank's liquidity package encouraged flows out of the zone, while Asian shares consolidated near recent highs following a flat finish on Wall Street.

Benchmark indices hit record all-time high led by gains in capital goods, oil & gas, realty and power sectors as foreign institutional investors continued to pump in dollars on hopes of a reformist budget. The indices are likely to move higher in the trade taking cues from supportive Asian markets as well.

The market got a boost from metal and mining stocks, which surged for a third straight session after positive manufacturing data from China earlier this week aided sentiment.

RBI retained the repo rate, at which it lends short-term funds to banks, at 8% but reduced the statutory liquidity ratio (SLR) to 22.5% from 23%, effective the fortnight starting 14 June.

The next trigger for the market will be any positive surprise from the Reserve Bank of India at its policy meet tomorrow, say analysts. However, the central bank is likely to keep interest rates unchanged tomorrow, says ET poll.

At 10:45AM, the 30-share Sensex was down 145 points at 24,411 and the 50-share Nifty was down 35 points at 7,294.

In an extremely volatile trading session, certain stocks, especially of capital goods and realty companies, fell as much as 30 per cent from their day’s highs, as investors judged recent gains excessive.

Rising for the third straight session, the 30-share Sensex shot up by 344.19 points, or 1.39 per cent, to trade at 25,037.54 with all the sectoral indices, led by power, PSUs, capital goods, auto, realty and banking sectors, trading in positive zone and rising up to 2.13 per cent.