Snapping the two-day losing string, the Sensex on Tuesday advanced by 24 points on buying in refinery stocks spurred by lower oil prices amid the prevailing subdued sentiment after RBI steps to shore up rupee.
In choppy trade, the BSE benchmark index traded in a 130-point range before closing at 16,906.58, up 24.42 points.
On similar lines, the 50-share National Stock Exchange index Nifty advanced 6.15 points, 0.12% to 5,120.80.
Shares of refinery, power, PSU and healthcare firmed up while consumer durable and FMCG stocks declined.
Brokers said the refinery stocks attracted investor interest as the fall in crude oil prices might help ease the burden of selling fuels at subsidised rates.
Sensex heavyweight Reliance Industries rose 1.05%, Oil India gained 1.50% and HPCL jumped 2.36%.
In London, Brent crude for August delivery was trading at $91.43 per barrel on the ICE Futures exchange.
Out of the 30-share Sensex, 20 counters including Gail, Tata Power, ONGC and TCS gained while 10 counters including Hindustan Unilever, Sterlite Industries and ITC declined.
The market breadth continued to remain positive as 1,383 shares ended with gains while 1,355 finished with losses.
Ahead of expiry of this month's derivative contracts on Thursday, sentiment in Indian stocks was cautious amid subdued sentiment over the recent RBI measures to prop up the rupee.
"Markets opened on a neutral note on mixed global cues. It was a choppy session ahead of derivative expiry on Thursday," said Shanu Goel, Senior Research Analyst, Bonanza Portfolio.
Dealers said investors now await the government and RBI's future measures to boost the economy and stem the rupee slide.
Globally, the trends in Asian markets were negative while European indices were trading mixed in early trade. Indices in China, Singapore, Japan, Taiwan and South Korea were down by 0.09% to 0.81%.
Market participants remained sceptical of the immediate effect on the rupee on account of yesterday's RBI steps while global investors appeared pessimistic that the upcoming EU Summit will produce any substantial measures to solve the region's deepening debt crisis.
RBI on Monday announced hiking of the foreign investment cap on government bonds by $5 billion and hike of limit on overseas commercial borrowings by $10 billion.
European shares were trading marginally higher as key benchmark indices in UK, France and Germany were up by 0.05% to 0.11%.
Back home, major gainers from the Sensex pack were Gail India (2.74%), Tata Power (1.70%), ONGC (1.52%), TCS (1.40%), M&M (1.36%), HDFC Bank (1.28%), Sun Pharma (1.21%). Hero Motocorp and Reliance Industries gained over one% each.
However, Hindustan Unilever dropped by 2.02%, followed by Sterlite Industries (1.21%), ITC (1.12%), Infosys (1.05%) and Tata Steel (1%).
Among the sectoral indices, the BSE-Oil&Gas firmed up by 1.20%, followed by the BSE-Power (0.89%), the BSE-PSU (0.70%), the BSE-Healthcare (0.65%) and the BSE-Bankex (0.52%).
On the losing side, BSE-Consumer Durable declined by 0.98% and the BSE-FMCG shed 0.90%.
The total turnover declined further to Rs. 1,562.39 crore from Rs. 1,916.53 crore on Monday.
Foreign institutional investors (FIIs) bought shares worth Rs. 153.10 crore (net) on Monday as per provisional data from the stock exchanges.