The market benchmark Sensex added to its yesterday's rally by gaining 57 points today and the NSE Nifty pulled off a nearly 6-month closing high on increased buying in oil & gas and IT amid persistent foreign inflows and solid quarterly numbers so far.
The 50-share NSE Nifty rose 17.25 points, or 0.22 per cent, to 7,979.90 at the close -- its biggest closing since November 4, 2015.
Moreover, covering-up of short positions ahead of tomorrow's expiry of April series in the derivatives segment supported the upside.
Sentiment took on more shine after global crude rallied to this year's high, backed up by a falling output and a weaker dollar.
The US benchmark Brent crude oil surged 2.34 per cent to 46.81 per barrel in global market.
The rupee, on a firmer ground against the dollar, also had a bearing on the market mood.
Asia and Europe, however, traded lower as investors chose to remain cautious ahead of the outcome of the US Federal Reserve meeting later in the day.
Focus is also on the Bank of Japan, which is set to meet tomorrow.
At one point, the 30-share BSE Sensex slipped below the 26,000-mark after participants locked in gains in a few blue-chips amid weak Asian cues.
However, covering-up of short positions ahead of tomorrow's expiry saved the day as the benchmark settled higher by 56.82 points, or 0.22 per cent, at 26,064.12.
The gauge had gained 328 points in the previous session.
"The pending decision from the Fed and BOJ has kept the domestic market within a narrow range. Additionally, the expiry of derivative contracts is adding positive momentum due to the better fourth quarter results," said Vinod Nair, Head of Research, Geojit BNP Paribas.
For the better part of the day, the Sensex and the Nifty remained in the grip of volatility in view of upcoming expiry in the derivatives segment.
Adani Ports emerged as the star performer and closed 5.09 per cent up, followed by Bharti Airtel (3.54 per cent) ahead of its quarterly earnings.
ONGC, GAIL, M&M, ITC, Asian Paints and Wipro ruled high.
As many as 17 constituents in the 30-share Sensex gained.
Oil and gas jumped the most by 1.23 per cent, followed by infrastructure 1.12 per cent and FMCG 1.02 per cent.
The broader markets too displayed a firm trend as retail investors widened positions, with BSE small-cap index rising 0.28 per cent and mid-cap 0.13 per cent.
Foreign funds continued their buying spree and bought shares worth Rs 512.22 crore yesterday, as per provisional data.
Japan's Nikkei fell 0.36 per cent, Hong Kong's Hang Seng 0.21 per cent and Shanghai composite 0.37 per cent. Europe inched lower for the fourth time in five days in early trade.
"Market has steadied in a narrow range. Volatility is
foreseen in the market with the F&O expiry week. Developments in the euro zone will be the decisive factor for future market developments," said Gaurang Shah, Vice-President, Geojit BNP Paribas.
"A favorable monsoon, corporate earnings improvement, the possibility of the US Fed not raising key rates in the near future will be positive triggers, going ahead."
The market breadth turned positive as 1,820 stocks ended higher, 788 declined while 179 ruled unchanged.
The total turnover fell to Rs 3,279.90 crore, from Rs 3,968.19 crore last Friday.
