Sensex pared most of its losses and traded above 35,000 level, Nifty too was up nearly 19% at 10,507 as investors appeared holding their breath before the final results of assembly elections in five states were out.
The rupee too came off the day's low after falling close to 1.5% and trading at 74.44 at the opening trade. The rupee traded between 71.96 and 71.88 in the noon trade.
Analysts were expecting markets to react sharply to Reserve Bank Governor Urjit Patel's sudden resignation and possible defeat for the ruling BJP in the state assembly elections.
Stock and currency market did open sharply lower as Sensex shed 500 points at the opening trade but also recovered during the day.
Equity markets staged recovery on sustained buying by IT and pharma stocks. But yields on 10-year government bonds still showed some pressure.
Oil stocks, however, did not do very well. Concerns of rising crude prices weighed heavily on oil stocks after the Organisation of Petroleum Exporting Countries (OPEC) and Russia decided to cut oil production.
Analysts also warned of policy uncertainties in the wake of the resignation of RBI Governor on Monday.
All eyes are now on the finance ministry, which is expected to communicate its decision on the RBI governor by evening.