The S&P BSE Sensex and NSE Nifty 50 Indexes rebounded from yesterday's sharp selloff and defied weak trend in global markets after Finance Minister Nirmala Sitharaman on Monday said government will soon hold discussions with representatives of foreign portfolio investors, amid continuing overseas fund outflow from the markets following the decision to impose surcharge on certain class of such investors. The Sensex rose as much as 542 points and the NSE Nifty 50 Index moved above 11,000 level. Hopes of 25 basis points rate cut from RBI's Monetary Policy Committee also helped in boosting the market sentiment.

The Sensex ended 277 points or 0.75 per cent to close at 36,977 and the NSE Nifty 50 Index ended 0.79 per cent or 86 points higher at 10,948.

Economic Affairs Secretary Atanu Chakraborty said he would hold discussions with representatives of foreign portfolio investors (FPIs) soon.

Global stocks extended already substantial losses on Tuesday, after Washington tagged China as a currency manipulator, shaking fragile investor sentiment in a rapid escalation of the US-China trade war.

US Treasury Secretary Steven Mnuchin said on Monday the government had determined that China is manipulating its currency, and that Washington would engage the International Monetary Fund to eliminate unfair competition from Beijing.

"Most of the pension funds or major funds which invest in India are registered as foreign portfolio investors and they operate as trusts and converting them to company will be difficult and government acknowledging its mistake and saying it is ready to talk to them sends a positive signal," AK Prabhakar, head of research at IDBI Capital told NDTV.

Fifteen of 19 sector gauges compiled by BSE ended higher led by the S&P BSE Capital Goods index's 2.12 per cent gain. Realty, telecom, banking, auto and industrials sector gauges also advanced 1.4-2 per cent each.

On the other hand, S&P BSE Energy Index was top loser, down 0.7 per cent.

The mid- and small-cap shares outperformed their larger peers as the S&P BSE MidCap Index rose 1.4 per cent and the S&P BSE SmallCap Index advanced 1.7 per cent.

Indiabulls Housing Finance was top gainer in the Nifty 50 basket of shares, the stock rose 7.4 per cent to Rs 512. Yes Bank, Tech Mahindra, Bajaj Finance, Bharti Airtel, Hero MotoCorp, Eicher Motors and Maruti Suzuki were also among the gainers.

On the flipside, Zee Entertainment, Cipla, Reliance Industries, Power Grid, Tata Consultancy Servicves, Britannia Industries and Tata Motors were among losers.

The overall market breadth was positive as 1,637 shares closed higher while 809 ended lower on the BSE.