The DSE had plunged to 842.53 points in early trading following Tuesday's steep fall but revival of buying at lower levels lifted benchmark index to close 17.47 points higher at 876.60 points.

Stock brokers said reports that FM had announced in Parliament of tax proposals to promote investment in housing and R&D activities in knowledge-based industries gave much-needed boost to sagging market.

They said government's denial on investigation into stock related activities including mergers and acquisitions of some dotcom companies too helped market sentiments to improve. Domestic financial institutions led by UTI which stayed away in initial trading, forced to enter the ring with a massive buy orders at several counter to avert nearly crash in stock prices, they added.

Pharmaceutical sector shares which plunged to a recent low levels in early trading, came in the limelight on the announcement that the government was giving a 10-year tax holiday to R&D-based pharma companies and biotech firms. "The recovery seems to be of a technical nature which was expected by the players", felt a DSE broker.

"Several stocks were limited down at one stage but rebounded to freeze at upper end on late buying", said another stock broker.

Ranbaxy Lab after remaining locked in the lower end of circuit-filter at Rs 490 on sustained nervous selling by operators, rebounded to hit upper end of price band at Rs 601.45 against Tuesday's closing of Rs 535. Glaxo India after declining to Rs 360 on a major sell-off staged a recovery to close at Rs 381, showing a smart recovery of Rs 27.50.

Amongst cyclicals, Reliance in volatile trading commenced with overnight weakness at Rs 32 and declined further to Rs 313 on selling pressure but made a dramatic recovery to touch session's high of Rs 338.50 before settling Rs 9.10 higher at Rs 337.10.

Largest steel makers in the private sector, Tata Steel shares also in similar manners traded in the range of Rs 98.50 and Rs 103.80 and finally ended Rs 1.45 higher at Rs 103.45.