Wednesday, posting a fifth consecutive session of gains, as continued foreign investor buying lifted some recently under-performing blue chips such as State Bank of India, though others were hit by profit-taking.
Foreign institutional investors (FIIs) bought 27 billion rupees ($422.16 million) of shares on Tuesday, bringing their total to nearly 50.5 billion rupees over the previous four sessions.
Indian indexes have rallied over the past five sessions, with the broader NSE index up nearly 11 percent, on hopes that the government will announce steps to boost the economy.
Speculation has centred around measures to attract foreign inflows and curb non-essential imports, as well as on a potential hike in diesel prices that would help improve confidence about the government's finances.
"New RBI governor's action has been appreciated by rupee, and thereby equities, and now there are expectations that the government may try and match his efforts," said Dipak Acharya, fund manager at Baroda Pioneer Asset Management Co.
The broader NSE index rose 0.28 percent, or 16.40 points, to 5,913.15, closing above the psychologically important 5,900 level and marking its highest close since July 24.
The benchmark BSE index rose 0.35 points, to end at 19,997.45, almost unchanged from Tuesday's close. However, the gains were limited as a week of rise for world stocks petered out on Wednesday and a sell-off in oil and core government debt eased, after talks began on trying to avert a U.S. military strike on Syria against a broadly calm market backdrop.
Dealers also await the July factory data and the wholesale and CPI inflation data for August before the monetary policy review next week.
Banking shares rose on value buying with the State Bank of India Ltd rising 3.5 percent and Axis Bank Ltd ending 3.15 percent higher.
Dealers said state-owned banks were playing catch-up to the rally in private peers due to relatively attractive valuations.
Among midcap banks Union Bank Ltd rose 7.8 percent, while Bank of India Ltd surged 10.4 percent.
Shares of Larsen & Toubro Ltd gained 1.4 percent, adding to Monday's 7 percent rise after Goldman Sachs