The Sensex recovered from recent losses to close at its highest in more than one week on Thursday, after a volatile trading session ahead of the expiry of monthly derivative contracts.
While the Sensex closed 155 points higher at 26,366 level, Nifty rose 68.75 points at 8,103 level.
Both the indexes posted their highest closing level since December 19.
On BSE, IFCI (13.36 percent) and Page Industries (6.06 percent) were top gainers.
Divi's Laboratories fell 4.14 percent, the most on BSE.
On the Sensex, NTPC (1.68 percent) and Tata Motors (1.64 percent) were the top gainers on the index.
Market breadth was positive with 1,683 stocks closing higher against 901 falling on the BSE.
On the BSE, Divi's Laboratories, Bharat Financial Inclusion and Sun Pharma recorded maximum turnover of Rs 95.35 crore, Rs 91.47 crore and Rs 49.51, respectively.
"F&O expiry is likely to impact markets today... Volumes are pretty low across the world and generally that's the trend at this time of the year," said Dipen Shah, senior vice president, public client group research, Kotak Securities
Sensex heavyweights such as Reliance Industries and TCS closed 1.21 percent, and 1.51 percent, respectively.
Japan's benchmark Nikkei 225 slipped 1.3 percent to finish at 19,145.14, as the strengthening yen, which reduces export earnings, weighed on market sentiments. Australia's S&P/ASX 200 recouped earlier losses and rose 0.3 percent to 5,699.10. South Korea's Kospi inched up 0.1 percent to 2,026.46. Hong Kong's Hang Seng rose 0.2 percent to 21,795.02, while the Shanghai Composite lost 0.2 percent at 3,096.10. Shares were also lower in Taiwan.
European shares, the dollar and bond yields fell on Thursday, with traders using the quiet holiday period to book some profit on the rise that had lifted all three to multi-year and in some cases record highs recently