Dr Reddy's topped the Sensex gainers' chart with a jump of 3 per cent, followed by Reliance Industries, Bharti Airtel, Sun Pharma, Tech Mahindra, Kotak Mahindra Bank, Wipro and Infosys.
Powered by a rally in index heavyweight Reliance Industries, equity benchmark Sensex broke its four-session losing run to close above the 55,000-mark on Thursday despite a weak trend overseas.
Investors made a cautious return to IT, pharma and bank stocks after their recent sell-off. However, a depreciating rupee and persistent foreign fund outflows capped the gains, traders said.
Overcoming a lacklustre start, the 30-share BSE Sensex surged 427.79 points or 0.78 per cent to close at 55,320.28.
Similarly, the broader NSE Nifty advanced 121.85 points or 0.74 per cent to finish at 16,478.10.
Dr Reddy's topped the Sensex gainers' chart with a jump of 3 per cent, followed by Reliance Industries, Bharti Airtel, Sun Pharma, Tech Mahindra, Kotak Mahindra Bank, Wipro and Infosys.
In value terms, Reliance Industries accounted for about half of the benchmark's gains.
On the other hand, Tata Steel, NTPC, UltraTech Cement, Bajaj Finance, SBI, Asian Paints and HCL Tech were among the main laggards, shedding up to 3.81 per cent.
The market breadth was in favour of the bulls, with 20 of the 30 Sensex components closing in the green.
"The market continued to be dominated by a volatile global market with investors weighing the impact of the upcoming global central bank meetings.
"However, the domestic market reversed its losses during the closing hours due to positive movements in the US futures.
"FIIs are cautious ahead of the Fed policy even though the market may have factored-in an interest rate hike of 50 bps, due to risk of hawkish measures," said Vinod Nair, Head of Research at Geojit Financial Services.
Ajit Mishra, VP - Research, Religare Broking, said markets have been witnessing volatile swings in a broader range and most sectors are trading in tandem with the trend.
"We reiterate our cautious stance and recommend focusing more on sector/stock selection.
"Among sectors, auto and oil & gas look strong to us while metals may continue to trade subdued...," he added.
Barring metal and basic materials, all BSE sectoral indices logged gains, led by telecom (2.10 per cent), energy (2.03 per cent), oil & gas (1.78 per cent), healthcare (1.01 per cent) and teck (0.99 per cent).
In the broader markets, the BSE midcap and smallcap gauges rose up to 0.46 per cent.
World markets were trading weak ahead of the European Central Bank's policy announcement.
Elsewhere in Asia, bourses in Shanghai, Seoul and Hong Kong ended lower, while Tokyo settled higher.
European markets were trading significant lower during afternoon trade.
Meanwhile, international oil benchmark Brent crude slipped 0.13 per cent to $123.42 per barrel.
The rupee depreciated by 8 paise to close at 77.76 (provisional) against the US dollar on Thursday, weighed down by elevated crude oil prices and persistent foreign capital outflows.
Foreign institutional investors remained net sellers as they offloaded shares worth Rs 2,484.25 crore on Wednesday, according to stock exchange data.
