This is the highest closing for both the indices since May 15.
HDFC Bank was the top loser in the Sensex pack, falling 2.99 per cent, followed by Adani Ports at 2.87 per cent.
The BSE Sensex jumped 70.42 points to end at 34,503.49, while the broader NSE Nifty finished at 10,651.20, up 19 points.
The fall came on the back of a massive selloff in NBFCs, led by DHFL which skidded over 50 per cent on fears of a liquidity crisis.
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The NSE Nifty too ended 58.60 points, or 0.54 per cent, higher at 10,967.30 after shuttling between 10,985.15 and 10,928 during the session.
Coal India fell the most by 2.58 per cent among Sensex scrips, dragging the index into the negative zone.
The Nifty finished the day at 10,265.65, a hefty gain of 98.95 points, or 0.97 per cent, after shuttling between 10,270.85 and 10,195.25.
The wider Nifty hit a low of 10,033.35 before finishing at 10,044.10, down 74.15 points or 0.73 per cent.
The broader NSE Nifty closed 1.25 points, or 0.01 per cent down at 10,564.05.
Yes Bank was the top gainer in the Sensex pack, surging 3.76 per cent, followed by SBI at 3.18 per cent.
Sustained FII inflows and fresh spell of buying by domestic institutional investors fuelled the rally
The breadth, indicating the overall health of the market, turned negative. On the BSE, 1,581 shares declined and 1,246 shares fell. A total of 165 shares were unchanged.
Profit-booking by participants in view of the domestic markets' recent record-setting run fuelled the downtrend
Covering-up of pending short positions on expiry of the July derivatives contracts and a strengthening rupee propped up the markets at high levels
Other than ITC, other laggards include PowerGrid, Infosys, M&M, NTPC, SBI, HDFC, Kotak Bank, HDFC Bank, TCS, Hero MotoCorp, Coal India, ONGC, RIL, Asian Paint, IndusInd Bank, ICICI Bank, Maruti Suzuki, Bajaj Auto, Tata Motors, Bharti Airtel and Axis Bank.
Small- and mid-cap stocks continued facing selling pressure due to stretched valuations.
The broader NSE Nifty dipped below the 10,200-mark to hit a low of 10,180.25 before ending at 10,195.15, down by 165 points, or 1.59 per cent.
Geo-political concerns over death of a Saudi journalist, Brexit and likely breach in Italy's budget also kept investors cautious.
Sun Pharma was the biggest gainer in the Sensex pack, advancing 1.79 per cent.
The S&P BSE Midcap and the S&P Smallcap indices rallied over 1% each
In the broader market, the S&P BSE Midcap ended 0.1% down, while the S&P BSE Smallcap index gained 0.3%.
The wider NSE Nifty touched a low of 10,652.40 before finishing at 10,671.40, showing a loss of 97.75 points, or 0.91 per cent.
The NSE Nifty cracked below the 10,800-mark to hit a low of 10,753.05 intra-day, before closing at 10,762.45 with a loss of 59.40 points, or 0.55 per cent.
On the BSE, 1,650 shares declined and 1,188 shares rose
The NSE Nifty, which dipped below the key 10,800-mark to touch a low of 10,755.40, bounced back on late buying to close at 10,817.70, up 9.65 points, or 0.09 per cent.
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The 50-share NSE Nifty too closed down 168.30 points, or 1.58 per cent, at 10,498.25 -- a level last seen on January 3 when it closed at 10,443.20.
This is its biggest single session fall since August 24, 2015, when it had lost 1,624.51 points.
The S&P BSE Midcap and the S&P BSE Smallcap indices slipped in red to shed over 1% each
The broader NSE Nifty too reclaimed the key 11,500-mark. It touched a high of 11,562.25, before finally settling at 11,536.90, showing a gain of 59.95 points, or 0.52 per cent.
The Sensex has now lost 878.32 points in six sessions -- its longest string of losses in six months.
Broader market underperformed with the BSE Midcap and the BSE Smallcap indices losing up to 0.2%
The session was marked by volatility and stock-specific action, even as the overall sentiment remains risk-averse, brokers said.
Sentiment was hurt after market regulator Sebi directed bourses to initiate action against 331 suspected shell companies.
Investors booked profits in recent gainers
Banking stocks dipped with Nifty PSU Bank index falling 1.7% after the government notified the ordinance that seeks to tackle non-performing loans in the sector.
Side indices raced ahead with BSE Midcap and BSE Smallcap advancing 0.4% and 0.3% up, respectively.
Sentiments took a hit after broader Asian markets weakened, following a renewed sell-off on Wall Street on Tuesday as energy shares dropped after crude oil prices plunged to a 13-month low amid weak earnings and US-China trade disputes, fuelling worries about economic growth
Both the indices ended at their highest levels since February 1.
