Benchmark Sensex rose by 213 points while Nifty settled above the 19,400 level on Wednesday following buying in banking counters and early gains in European stocks.
The BSE Sensex climbed 213.27 points or 0.33 per cent to settle at 65,433.30. During the day, it jumped 284.68 points or 0.43 per cent to 65,504.71.
The NSE Nifty gained 47.55 points or 0.25 per cent to end at 19,444 as 29 of its components ended in the green while 22 declined.
From the Sensex pack, ICICI Bank, State Bank of India, Larsen & Toubro, Maruti, Tata Steel, Kotak Mahindra Bank, Bajaj Finance, Nestle, Power Grid and HDFC Bank were the major gainers.
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Jio Financial Services, Bharti Airtel, Tata Motors, Tech Mahindra, ITC, UltraTech Cement and Mahindra & Mahindra were among the laggards.
In Asian markets, Tokyo and Hong Kong settled in the green while Seoul and Shanghai ended lower. European markets were trading with gains. The US markets ended on a mixed note on Tuesday.
"On the domestic front, sentiments remained positive, backed by strong demand in the banking sector, though IT and pharma limited the gains," said Vinod Nair, Head of Research at Geojit Financial Services.
Global markets have restrained from making significant moves as they await the outcome of the central bankers' gathering at Jackson Hole scheduled for Friday, Nair added.
Global oil benchmark Brent crude declined 0.83 per cent to USD 83.33 a barrel.
Foreign institutional investors (FIIs) offloaded equities worth Rs 495.17 crore on Tuesday, according to exchange data.
The BSE benchmark had eked out a marginal gain of 3.94 points or 0.01 per cent to settle at 65,220.03 on Tuesday. The Nifty inched up 2.85 points or 0.01 per cent to settle at 19,396.45.