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The Sensex and Nifty ended higher after a volatile session led by realty, capital goods and oil & gas stocks amid positive global cues.
According to brokers, domestic sentiment was lifted as inflation based on the wholesale price index fell to a five-month low of 2.17 per cent in May.
However, investors remained cautious ahead of the US Federal Reserve policy decision on interest rates later in the day.
The benchmark BSE index closed 52.42 points or 0.17 per cent higher at 31,155.91. The broader NSE index ended up 11.25 points or 0.12 per cent at 9,618.15.
Among BSE sectoral indices, realty index was up 1.5 per cent, followed by capital goods 0.88 per cent, oil & gas 0.68 per cent and PSU 0.25 per cent. On the other hand, metal index fell the most by 0.73 per cent, FMCG 0.68 per cent and healthcare 0.18 per cent.
Top five Sensex gainers were Reliance (+3.3%), Dr Reddy's (+1.41%), L&T (+1.4%), ICICI Bank (+1.38%) and HUL (+0.91%), while the major losers were Cipla (-2.16%), ITC (-1.62%), HDFC (-1.29%), Wipro (-1.27%) and Tata Steel (-1.13%).
Shares of Reliance Industries climbed as Jio has added 3.9 million subscribers.
Insolvency proceedings
State-run lenders swung between gains and losses amid worries they would have to raise the provisioning levels after the Reserve Bank of India on Tuesday identified 12 of the largest loan defaulters and said it will direct lenders to begin insolvency proceedings around them.
Analysts said the outcome from the Fed meeting later on Wednesday would set the near-term trend. Investors expect a 25 basis points interest rate hike, and more clarity on the rate path ahead as well as on plans to shrink the mammoth bond portfolio.
“The markets are in an uptrend with not too many signs of weakness, but caution remains ahead of the Fed policy", Anupam Singhi, chief operating officer at William O'Neil India, said.
The Fed is widely expected to raise its benchmark interest rate this week due to a tightening labour market and may also provide more details on its plans to shrink the mammoth bond portfolio it amassed to nurse the economic recovery.
The Fed will probably express its confidence inflation will climb towards its 2 per cent target at its meeting, but such assurances are a poor indicator of the central bank's future policy.
Asian shares turned mixed on Wednesday as investors everywhere awaited clarity on the Federal Reserve's future path for US policy after a likely rate rise later in the day.
The market reaction was tepid with Shanghai stocks easing 0.5 per cent and South Korea off 0.2 per cent. Moves elsewhere were also cautious with MSCI's broadest index of Asia-Pacific shares outside Japan up a fraction and Japan's Nikkei ahead by 0.1 per cent.
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