Mumbai, February 12: Stocks staged a strong comeback in early trade with the BSE Sensex gaining over 260 points and the Nifty recapturing the 10,500-level on continued buying by domestic funds ahead of inflation data to be released after market hours today. Asian markets were also trading in the green after a late-day rally on Wall Street on Friday.

The 30-share Sensex recovered by 260.12 points, or 0.76 percent, to 34,265.88 in opening trade. The index had lost 407.40 points or 1.18 percent to settle at one month low of 34,005.76 on Friday. All the sectoral indices led by metal, realty and infrastructure were trading in the green with gains up to 1.44 percent.

The broad-based NSE Nifty went up by 81.65 points or 0.78 percent to 10,536.60. Major gainers were ONGC, Tata Steel, Sun Pharma, Bharti Airtel, Adani Ports, L&T, HeromotoCorp and Axis Bank.

Larsen and Toubro rose by 1 percent after it announced a Rs 2,200 crore order win by its wholly-owned arm L&T Hydrocarbon Engineering from Abu Dhabi-based Al Dhafra Petroleum Operations Company Limited. SBI, however, dropped 2.85 percent following poor quarterly results. The PSU lender on Friday posted a net loss of Rs 1,886.57 crore after a massive under-reporting of dud assets in the past fiscal and reverses in treasury operations.

Brokers said sustained buying by domestic institutional investors amid a firm trend at other Asian bourses improved the market sentiment. Domestic institutional investors bought shares worth a net Rs 588.42 crore while foreign portfolio investors sold shares worth a net Rs 1351.70 crore on Friday, provisional data showed. In the Asian region, Hong Kong's Hang Seng was up 0.64 percent and Shanghai Composite Index by 0.39 percent in early trade. The US Dow Jones Industrial Average ended 1.38 percent higher on Friday.