Mumbai: The BSE benchmark index Sensex recovered from early lows to close higher by 82 points after the government deferred implementation of the General Anti-Avoidance Rules (GAAR) by one year.

The 30-share barometer index had dropped by 317 points to intra-day low of 16,513.77 on fears that proposed provisions could lead to heavy tax burden for foreign investors investing through tax-friendly places like Mauritius.

Buying emerged in last 30 minutes of trading soon after Finance Minister Pranab Mukherjee announced a slew of measures to provide relief to the equity markets and postponed implementation of GAAR by one year.

The Sensex bounced back to end 81.63 points, or 0.48 percent, up at 16,912.71 points on Monday.

The broad-based National Stock Exchange index Nifty also bounced back from four-month low levels to close higher by 27.30 points, or 0.54 percent to 5,114.15.

The rally was headed by capital goods, power, metal and consumer durables stocks, even as Reliance Industries and Infosys, two market majors, closed lower.

Significant gains in Larsen & Toubro, Bharat Heavy Electricals Ltd, State Bank of India, Maruti Suzuki, Bajaj Auto, DLF, ICICI Bank, Jindal Steel, NTPC Tata Motors and Tata Steel helped Sensex settle in the positive zone.

Bucking the trend, oil major Reliance Industries fell by 1.53 percent to Rs 715.30 and Infosys by 0.43 percent to Rs 2,430.60.