The S&P BSE Sensex and NSE Nifty 50 indexes rebounded strongly after two days of losses led by gains in ICICI Bank, Reliance Industries, Larsen & Toubro, Mahindra & Mahindra and Kotak Mahindra Bank. Indian equity benchmarks rose in line with Asian peers as investors cheered US President Donald Trump hinting at a possible US-China trade deal. President Trump said on Wednesday a deal to end a nearly 15-month trade war with China "could happen sooner" than people think, which would remove a huge shadow over the global economic outlook. The Sensex rose as much as 565 points to hit intraday high of 39,158 and Nifty surged as much as 145 points to briefly trade above important level of 11,600.

The Sensex ended 396 points or 1.03 per cent higher at 38,990 and the NSE Nifty 50 index climbed 131 points or 1.15 per cent to close at 11,571.

All sector gauges except the Nifty IT index ended higher led by the Nifty Metal index's over 4 per cent jump. Nifty Realty, Nifty Auto, Nifty Media, Nifty Private Bank, Nifty Bank and Nifty Financial Service indexes also rose between 1.1-2.6 per cent each.

Mid- and small-cap shares also witnessed buying interest but both the indexes underperformed the Nifty 50 index. Nifty Midcap 100 index rose 0.86 per cent while the Nifty Smallcap 100 index rose 0.62 per cent.

Vedanta was top gainer in the Nifty 50 basket of shares, the stock rose 6.88 per cent to close at Rs 166.95. Mahindra & Mahindra, Coal India, Indian Oil, Zee Entertainment, Tata Steel, ICICI Bank, ONGC, Maruti Suzuki and Bharat Petroleum also rose between 3. and 6 per cent each.

On the flipside, Yes Bank, Indiabulls Housing Finance, Infosys, Hindustan Unilever, Wipro and HCL Technologies were among the laggards.

The overall market breadth was positive as 977 shares ended higher while 782 closed lower on the NSE.

(With inputs from Reuters)