Benchmark indices ended at one week high supported by Asian and European markets amid a rising rupee.
Participants engaged in buying beaten down bluechips at lower and attractive valuations.
Further, investors are cautiously awaiting the policy decisions from the Federal Reserve and the Bank of Japan.
The US Federal Open Market Committee concludes its two-day meeting today while the Bank of Japan will start its two-day meeting today.
The S&P BSE Sensex surged 331 points to end at 26,726 and the Nifty50 dropped 92 points to close at 8,201.
Among broader markets, BSE Midcap and the BSE Smallcap index rose between 0.6%-0.8%.
Adds Hiren Dhakan, Associate Fund Manager, Bonanza Portfolio, "Markets would continue to be watching the developments with respect to ‘Brexit’ which is concerning with the respect to the strength of Euro and the Euro union if Brexit happens to be a reality.
"We expect the markets to remain weak for coming sessions and remain in the range of 7,600-8,300 over the medium term".
The rupee appreciated 8 paise to 67.19 against the US dollar on fresh selling of the American unit by exporters.
Besides, the Union Cabinet on Tuesday cleared the Civil Aviation Policy, which is set to open door to a number of passenger-friendly measures including capping of airfares at Rs 2,500 for an hour-long flight.
Concerned over food inflation, Finance Minister Arun Jaitley will review the situation on Wednesday and discuss steps to keep prices of essential commodities, including pulses, in check.
India's economic growth will cross the 8% mark this financial year on the back of good monsoon and pick up in manufacturing, NITI Aayog Vice-Chairman Arvind Panagariya has said.
Among overseas markets, European shares rose and sterling gained against the dollar and yen on Wednesday as expectations of dovish words from the US Federal Reserve soothed investors on edge over whether Britain will vote to leave the European Union.
The Federal Reserve is expected to keep interest rates unchanged on Wednesday and signal if it still plans to raise rates twice in 2016 amid concerns about a US hiring slowdown and Britain's possible exit from the European Union.
Chinese mainland markets rose, shrugging off a decision by stock index provider MSCI saying yesterday to delay inclusion of mainland-traded Chinese A shares in its key emerging market index. In mainland China, the Shanghai Composite index closed 1.58% higher.
In Hong Kong, the Hang Seng index closed 0.39% higher. In Japan, the Nikkei 225 index settled 0.38% higher.
Back home, top gainers from the Sensex pack were SBI, L&T, NTPC, Bharti Airtel and maruti Suzuki, all surging between 2%-4.5%.
All three listed associates’ banks of State Bank of India -- State Bank of Mysore, State Bank of Travancore and State Bank of Bikaner & Jaipur -- ended higher between 5%-20% each on the BSE. SBI gained over 3%.
Prime Minister Narendra Modi's cabinet on Wednesday approved the takeover by State Bank of India of several subsidiaries, a government source said, in a first move to consolidate the country's struggling public sector banks.
State-run NTPC, for the first time, has traded in un-requisitioned surplus power from four of its prominent thermal generating stations -- Vidhyanchal, Unchahar, Rihand and Dadri Power -- at the Indian Energy Exchange.
The trading took place as per the amendments to the National Tariff Policy carried out in January 2016. The stock gained over 4%.
Bharti Airtel ended higher by almost 3% after the company announced that it has entered into an alliance with Singapore Telecommunications (Singtel) to deliver high-speed, secure enterprise data network coverage in the Asia-Pacific, West Asia, Africa, Europe and the US.
Shares of all three listed airlines companies -- Jet Airways (India), SpiceJet and InterGlobe Aviation (IndiGo) -- moved higher by up to 3% on the BSE after the Union Cabinet cleared Civil Aviation Policy.
Thiru Arooran Sugars was locked in upper circuit of 10% at Rs 108, also its 52-week high on the BSE, after the company reported net profit of Rs 27.37 crore for the quarter ended March 2016 (Q4FY16) as compared with net loss of Rs 18.61 crore in a year ago quarter.
Sintex Industries rallied by up to 6% on the National Stock Exchange after the exchange announced inclusion of these two stocks in the futures and options segment with effect from July 1.
