The S&P BSE Sensex on Thursday rose 145 points to settle above its crucial 28,000 level, while the broader Nifty50 closed just one-point below its 8,700-mark.
The headline indices rallied after ending lower the previous day, with financial stocks such as ICICI Bank contributing most of the gains, while advances in Asian markets underpinned investor sentiment.
The 30-share index was ended the day at 28,129, up 145.47 points, while the broad-based 50-share index closed at 8,699 up 40.30 points.
The final US presidential debate between Democratic nominee Hillary Clinton and Republican nominee Donald Trump also weighed on market sentiment, as Trump suggested that he might reject the outcome of the Nov 8 presidential election if he loses, a possibility Clinton called "horrifying."
Back home, investors await further quarterly results, with Reliance Industries Ltd slated to report later in the day.
"After volatile trading in the previous session, we're holding ground today. With earnings underway, more results unfolding would be supportive of the market," said Gaurang Shah, vice president, Geojit BNP Paribas Financial Services.
"In terms of triggers, the final US presidential debate is definitely a key," Shah added.
Adani Ports was the top gainer on both the benchmark indices and gained 6 per cent on the NSE.
Financial stocks recovered from Wednesday's losses with almost all constituents trading in the green on the Nifty Bank Index and the Nifty Financial Services Index, which also includes non-banking financial companies.
ICICI Bank Ltd ended the day 4.72 per cent higher and Axis Bank rose 1.5 per cent intraday.
(with inputs from Reuters)