Mumbai, Aug. 25: India's stock markets bounced back today from their lowest levels in a year - as markets were seen as oversold, while a fresh attempt by the government to pass the goods and services tax improved sentiment. A turnaround in the rupee's value also helped to improve the mood.

Still, the session was very choppy with the NSE Nifty falling as much as 1.8 per cent at one point and again rising 1.5 per cent.

The BSE Sensex began the day on a better note, opening at 25916.26 against the previous close of 25741.56.

Though the index built up on its gains as a few Asian indices were trading higher, it came under pressure as equities in China lost over 7 per cent.

As a result, the Sensex hit an intra-day low of 25298.42, a loss of 443 points.

However, relief came soon after Europe opened in the green. The 30-share index finally ended the day higher by 290.82 points, or 1.13 per cent, at 26032.38. In the previous three sessions, the index lost 2190.08.

"As the rupee started to appreciate, the market caught up from today's low. Improvement in developed markets and stability in global currencies are the important reasons for continuing with this positive momentum," Vinod Nair, head-fundamental research, Geojit BNP Paribas Financial Services, said.

The Nifty, too, made up its losses and finished with gains of 71.70 points, or 0.92 per cent, to end the day at 7880.70. Intra-day, it moved between a high of 7925.40 and a low of 7667.25.

Meanwhile, foreign portfolio investors continued to press sales in stocks. Provisional data showed that they sold stocks to the tune of Rs 2,020 crore.

However, domestic institutional investors made net purchases of Rs 1,963 crore, thus providing some buying support.

There was more good news in store for investors as the Chinese central bank announced steps that included a relaxation in reserve requirements and a cut in interest rates to revive its economy.

The move had a positive rub-off effect on the rupee, which appreciated by 55 paise against the greenback to close at 66.10, its biggest single-day gain in over seven months.

Around the world, stocks, oil prices and safe-haven bond yields rose on Tuesday.

Wall Street opened more than 2 per cent higher, while the dollar motored ahead against most currencies.

US crude futures traded up 2.3 per cent at $39.10 per barrel, while Brent rose 2.3 percent to $43.69. Copper rose 1 per cent.

The stock market gains in Europe, which recouped the bulk of the 5-percent-plus lost on Monday, were also supported by takeover news.

In China, the Shanghai closed down 7.63 per cent, while Japan's Nikkei closed down 3.96 per cent. Hong Kong's Hang Seng closed up 0.72 per cent.