A total of 10 new stocks have been included in BSE Mid-Cap index, while 12 existing ones would move out.
Any market correction, analysts say, would be an attractive entry point for risky assets, which should do well over the medium-to-long term.
BSE Metal, IT and Consumer Durable indices surged by nearly 2% each. However, BSE FMCG index declined by nearly 1%.
The Bombay Stock Exchange's 30-share Sensex closed at 19,504 up 117 points. The National Stock Exchange's 50-share S&P CNX Nifty closed up 26 points at 5,930.
Changes in the economic environment have altered the dynamics of stock markets. In the recent past, they have started defying investment fundamentals.
Enjoy the ride but avoid getting greedy. Disciplined profit-taking is a must to survive in the treacherous markets ahead, says Sonali Ranade
An AP tweet, which an AP spokesman says was "bogus," had said there were two explosions at the White House.
Investors have turned cautious and parked their funds in less risky and fundamentally strong stocks ahead of the second-quarter earnings season.
Corporate Affairs Minister Veerappa Moily on Tuesday lashed out at global credit rating agency Standard and Poor's (S&P) for describing Prime Minister Manmohan Singh as "unelected" leader and saying the comment "smacked of politics".
FMCG stocks have underperformed the market, falling 2.2 per cent so far in 2014.
In a string of bold initiatives, the government, accused of a 'policy paralysis', first announced a steep 12 per cent, or Rs 5 per litre, increase in the regulated diesel prices on Thursday and a cap on subsided cooking gas usage.
Under the Indradhanush roadmap announced in 2015, the government will infuse Rs 70,000 crore in state banks over four years while they will have to raise a further Rs 1.1 trillion from the markets to meet their capital requirement in line with global risk norms, known as Basel III.
The S&P BSE Sensex ended the day at 28,226, up 85 points, while the Nifty50 settled at 8,734, up 18 points.
Retaining India's sovereign rating at the lowest investment grade, global agency S&P on Tuesday warned that a downgrade is likely for the country if its political climate worsens and pace of fiscal reforms slows down.
