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The BSE Sensex gained on Wednesday after three days of falls as Sun Pharmaceutical Industries rose after Sweden's Meda denied it was in talks to sell itself, while Larsen & Toubro advanced after winning a major gas project in Saudi Arabia.
Reliance Industries also rose a day ahead of its annual general meeting amid speculation the company may have new announcements about a potential tie-up with Reliance Communications.
The outlook for broader shares remains weak amid worries foreign institutional investors will reduce purchases due to the weakening rupee and a potential end to the US's monetary stimulus.
Although FIIs have invested 15.34 billion rupees in Indian stocks so far in 2013, they sold 33 billion rupees worth of index futures in the last three trading sessions, indicating they are bracing for lower levels in cash shares in the near term.
"FII selling is worrisome only for short term, but factors like Fed tapering and rupee appreciation are putting more focus on it," said Paras Adenwala, managing director and principal portfolio manager at Capital Portfolio Advisors.
The Reserve Bank of India needs to be less hawkish as well if shares have to continue their upward trajectory, Adenwala added.
The BSE Sensex rose 0.11 percent, or 22.44 points, to 19,568.22. The index lost 3.3 percent over the previous three sessions to close at its lowest in nearly a month on Tuesday.
The Nifty rose 0.07 percent, or 4.40 points, to 5,923.85.
Sun Pharmaceutical rose 1.8 percent after Meda AB said it was not involved in discussions with a potential buyer, contradicting reports that the two companies were in talks.
Sun shares had fallen recently on media reports it was in talks to buy Meda for $5 billion to $6 billion.
Larsen & Toubro (L&T) rose 0.7 percent after it won an infrastructure contract worth nearly $300 million from Saudi Aramco as India's biggest construction and engineering firm chases overseas projects to offset a slowdown at home.
Reliance Industries, which operates in the telecoms sector via unit Reliance Jio Infocomm, gained on speculation of a new tie-up with Reliance Communications Ltd (RLCM.NS).
Both companies had announced in April a fibre optic network sharing deal.
Reliance Industries rose 2.8 percent, while Reliance Communications rose 5.4 percent.
Other companies controlled by billionaire Anil Ambani, who controls Reliance Communications, also gained.
Reliance Infrastructure Ltd (RLIN.NS) gained 1.3 percent, Reliance Capital Ltd (RLCP.NS) rose 1.5 percent, while Reliance Power Ltd (RPOL.NS) ended 1.7 percent higher.
Indian search service provider Just Dial Ltd (JUST.NS) rose 15.5 percent to 612.35 rupees from its initial public offer price of 530 rupees in its stock market debut on Wednesday.
The company raised about $165 million last month in the country's biggest listing so far this year.
However, among stocks that fell, Cadila Healthcare Ltd (CADI.NS) dropped 4.7 percent after the drugmaker announced regulatory approval for a diabetes drug, disappointing investors who had expected a bigger announcement.
Cement makers Ambuja Cements Ltd (ABUJ.NS), ACC Ltd (ACC.NS) and UltraTech Cement Ltd (ULTC.NS) fell as the early arrival of monsoon rains is seen likely to hurt construction activity in the coming months.
Ambuja Cements fell 1.7 percent, while ACC dropped 1.1 percent and UltraTech ended 0.8 percent lower.
