However, the markets gave up some of those gains soon after. At 2:53 pm, the Sensex traded 1,983.03 points - or 7.43 per cent - higher at 28,657.06, while the Nifty was up 530.55 points - or 6.80 per cent - at 8,331.60.
As 45 components in the Nifty basket of shares enjoyed the positive territory at the time, top percentage gainers were Reliance Industries, UPL, Kotak Mahindra Bank, Grasim, Maruti Suzuki India and HDFC Bank, up between 10.00 per cent and 16.67 per cent. On the other hand, IndusInd Bank, Coal India and ITC - down 2.04 and 3.04 per cent - were among the top Nifty losers.
All of the 11 sectoral indices on the National Stock Exchange traded deep in the green at the time. The Nifty Bank index - comprising stocks of 12 major lenders in the country - was up 8.28 per cent, having risen as much as 9.55 per cent earlier. The financial sector has a weightage of 42 per cent in the Nifty basket of 50 shares.
Reliance Industries (up 16.68 per cent), HDFC Bank (9.99 per cent), HDFC (9.30 per cent) and Kotak Mahindra Bank (12.79 per cent) were the top contributors to the gain in Sensex.
Market breadth favoured gains, as 1,169 stock traded higher while 960 moved lower on the BSE. On the National Stock Exchange, 1,039 stocks advanced while 697 declined.
The National Stock Exchange's India VIX index - which gauges the markets' expectation of volatility in the near term - was down 8.19 per cent cooling off after several sessions of surge.
Finance Minister Nirmala Sitharaman said on Tuesday that the government will soon announce a fiscal package to aid the economy's fight against the outbreak, and there is "no intention of delaying such announcements". (Read: Finance Minister's Top 10 Announcements On Relief Steps Over Coronavirus)
"Gains in global markets are supportive and expectations of domestic stimulus have now gone up," said Neeraj Dewan, director at Quantum Securities.
Equities around the globe rebounded on Wednesday as the US Congress appeared closer to passing a $2-trillion stimulus package to shield the world's largest economy from the fast-spreading COVID-19 disease. Analysts say investors around the globe are assessing the strength of measures brought in by policymakers against the rapidly spreading coronavirus against the rising cases of outbreak.
Meanwhile, e-commerce major Flipkart suspended services as the 21-day lockdown came into effect. Amazon India's pantry service that delivers groceries was also not available in several cities and Alibaba-backed online grocer BigBasket said its services had been impacted.
Domestic stock markets soared more than 7 per cent on as buying strengthened in the second half of the session, as India began a 21-day countrywide lockdown to curb the spread of the deadly coronavirus pandemic.The S&P BSE Sensex index jumped as much as 2,116.16 points to touch 28,790.19 in afternoon deals, and the broader NSE Nifty 50 benchmark climbed to a high of 8,376.75, up 575.7 points from the previous close. Buying in energy and financial sectors pushed the markets higher, but analysts said high volatility cannot be ruled out in the near term amid the rising number of COVID-19 cases.