The benchmark BSE index rose over 160 points, marking its highest close in a month, as mortgage lenders such as Housing Development Finance Corp rose on hopes the government's push on housing would aid income.

Prime Minister Narendra Modi had earlier in the day launched smart cities, housing for all and urban rejuvenation schemes for Asia's third largest economy.

Also, the south-west monsoon rains have been above normal so far in June, stoking hopes the central bank will cut rates in October than in 2016 as anticipated earlier after delivering three cuts of 25 basis points each in 2015 so far.

The 30-share BSE index Sensex ended higher by 166.30 points or 0.6 per cent at 27,895.97 and the 50-share NSE index Nifty ended up by 37.15 points or 0.44 per cent at 8,398.

Both the indexes also marked their ninth session of gains in 10.

Among BSE sectoral indices, capital goods index gained the most by 2.12 per cent, followed by realty 1.05 per cent, power 0.97 per cent and oil & gas 0.95 per cent. On the other hand IT index was down 0.98 per cent, followed by TECk 0.63 per cent, FMCG 0.54 per cent and consumer durables 0.09 per cent.

Top five Sensex gainers were Bajaj Auto (+4.65%), GAIL (+3.44%), L&T (+3.28%), HDFC (+2.2%) and VEDL (+2.1%), while the major losers were Wipro (-2.03%), Cipla (-1.74%), HUL (-1.28%), ONGC (-1.27%) and NTPC (-0.95%).

"Amid expected fall in wholesale rates, the housing push is a boon for economy and such lenders," said Deven Choksey, managing director at K R Choksey Securities.

Stocks also got support after the labour minister said the state social security fund would start investing in equity markets next month, as part of a reform drive aimed at boosting the economy.

But expiry of June equity derivative contracts and Greek debt crisis kept investors on edge.

Global markets

European shares fell for a second straight session on Thursday, with lingering concerns of a Greek debt default following a lack of progress in negotiations with its creditors prompting investors to cut their exposure to riskier assets like equities.

At 0706 GMT, the pan-European FTSEurofirst 300 index was down 0.5 per cent at 1,569.82 points after closing 0.4 per cent lower in the previous session.

Asian shares and the dollar edged down in Asian trade on Thursday, with investors on ice ahead of a meeting of the European Union leaders later in the session as Greece continued last-minute efforts to avert a default.

MSCI’s broadest index of Asia-Pacific shares outside Japan was a few ticks lower but holding close to the previous session’s close.

Japan's Nikkei stock index fell about 0.3 per cent after hopes for a resolution to Greece’s debt crisis had helped propel it on Wednesday to its highest level since 1996.

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