Traders said the expiry of monthly derivatives at the end of the session sparked less volatility than usual, with broader sentiment also helping as global shares rose towards six-year highs after a raft of positive US economic data.
Still, a stronger-than-expected US economy could hurt Indian shares if it spurts the Federal Reserve to start tapering its monetary stimulus, creating some caution in the weeks ahead.
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More immediately, traders are looking for India's economic growth data on Friday, which is expected to have picked up 4.6 per cent in the July-September period from 4.4 per cent in the previous three months.
The benchmark BSE Sensex rose 0.56 per cent, or 114.65 points, to end at 20,534.91, rebounding from two consecutive day of falls. The broader Nifty rose 0.57 per cent, or 34.75 points, to end at 6,091.85, about 8 points short of a psychologically important 6,100 level.
State-run Power Grid Corp of India ended up 2.8 per cent after being among the leading losers on Wednesday ahead of a share sale that is part of the government's disinvestment programme. Among other blue chip shares, Infosys rose 1.1 per cent while Mahindra and Mahindra Ltd ended 1.8 per cent higher, recovering from falls on Wednesday.
Dr Reddy's Laboratories shares gained 1.2 per cent on hopes of increased market share of a key anti-hypertension generic drug after a second plant operated by its competitor Wockhardt was hit by the US Food and Drug Administration's "import alert".
IDFC, a contender for a banking licence by the Reserve Bank of India, gained 1.4 per cent after salt-to-software conglomerate Tata Sons TATAS.UL withdrew its application for an Indian banking licence.
Tata's withdrawal could increase chances of IDFC obtaining a banking license, traders said.
Apollo Tyres rose 4.5 per cent as some investors were buying call options of December series at Rs 90 on hopes its takeover bid for US-based Cooper Tire & Rubber will fail, multiple traders said.
Shares of sugar companies rebounded after Food Minister K V Thomas said the government could give financial aid to sugar mills to help them pay farmers higher prices for cane, as surplus production pusheed retail prices ever lower.
Bajaj Hindusthan rose 4.2 per cent after earlier falling a per cent, while Shree Renuka Sugars gained 1.7 per cent and Balrampur Chini Mills ended higher 1.2 per cent.
Among stocks that fell, Nestle India lost 3.8 per cent after the company in a statement to exchanges denied any plans by its parent to increase stake the Indian unit.