Mumbai, May 8 (IANS) Key Indian equity index staged a smart recovery on Friday after its crash to the lowest level in 28 weeks the day before following a government assurance that it will seek advice from an independent panel to look at the issue of retrospective tax on capital gains.

The 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) began the day's session at 26,814.38 points, against the previous day's close at 26,599.11 points.

Some minutes into trading it was hovering around 26,843.80 points, with a gain of 244.69 points, or 0.92 percent. At the National Stock Exchange (NSE), the broader, 50-share Nifty was ruling at 8,129.45 points, up 72.15 points, ot 0.90 percent.

Finance Minister Arun Jaitley on Thursday said in the parliament the ministry had referred the issue of minimum alternate tax dispute with foreign funds to a panel headed by Law Commission chairman A.P. Shah, and had requested early suggestions.

There was external support for market sentiments as well. The US markets, also recovered from the losses in last couple of trading sessions and closed in the positive territory on Thursday, and so was the case with some of the Asian peers during the morning trading sessions on Friday.

The Sensex had fallen for the third straight day on Thursday by 118.26 points, or 0.44 percent, to a six-and-a-half month low, as uncertainties over tax policies, rising crude oil prices and falling value of the rupee that touched a 20-month low continuing to rock the mood.

In the process, the Sensex closed at its lowest level since Oct 21, last year and the Nifty at its lowest level since December 17.

On Wednesday, the Sensex had crashed 722.77 points, or 2.63 percent, while the day before it sell 50.45 points, or 0.18 percent.