Besides, appreciation in rupee and broadly positive global indices pushed the domestic equity markets higher.
However, investors remained cautious on account of the upcoming release of domestic macro-economic data points such as GDP, fiscal deficit and eight core industrial (ECI).
The two key indices closed the day's trade with gains of around a per cent each, as healthy buying was witnessed in banking, consumer durables and capital goods stocks.
The wider 51-scrip Nifty of the National Stock Exchange (NSE) edged higher by 82.35 points or 1.01 per cent to 8,224.50 points.
The barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 26,441.02 points, closed at 26,652.81 points -- up 258.80 points or 0.98 per cent from the previous close at 26,394.01 points.
The Sensex touched a high of 26,680.55 points and a low of 26,395.50 points during the intra-day trade.
The BSE market breadth was skewed in favour of the bulls -- with 1,765 advances and 827 declines.
"The ongoing short-covering rally got extended today on the back of higher global crude oil prices and increased transmission by lenders, as a slew of banks' reduced their rates," Anand James, Chief Market Strategist, Geojit BNP Paribas Financial Services, told IANS.
"Crude oil prices rose due to expectations that an agreement on crude oil production cut can be reached at the OPEC (Organisation of the Petroleum Exporting Countries) meet which is being held today."
According to Astha Jain, Senior Research Analyst at Hem Securities: "Rupee appreciation, as well as broadly positive global markets and value buying at lower levels lifted the Indian equity markets."
"However, some cautiousness on account of the upcoming domestic macro-economic data points such as GDP, fiscal deficit and ECI was also witnessed."
Dhruv Desai, Director and Chief Operating Officer of Tradebulls elaborated that CNX Nifty traded with firm sentiments as it tracked the bearish USD/INR futures prices and short covering at lower levels.
"Banking stocks traded firm, while pharma and oil-gas stocks traded with volatile sentiments," Desai said.
"Textile, media-entertainment, FMCG, cement and power stocks traded with firm sentiments tracking over all recovery in Indian equity markets."
The Indian rupee strengthened by 28 paise to close at 68.38 against a US dollar from its previous close of 68.66 to a greenback.
In terms of investments, provisional data with exchanges showed that the foreign institutional investors (FIIs) sold stocks worth Rs 434.42 crore, whereas the domestic institutional investors (DIIs) purchased scrip worth Rs 676.68 crore.
Sector-wise, all 19 sector based indices of BSE closed in the green, led by S&P BSE banking index which surged by 458.52 points, followed by the consumer durables index, which gained by 270.68 points, and the capital goods index, which rose by 217.40 points.
Major Sensex gainers on Wednesday were: ICICI Bank, up 3.62 per cent at Rs 265; Maruti Suzuki, up 3.39 per cent at Rs 5,263.45; State Bank of India (SBI), up 2.15 per cent at Rs 258.40; Larsen and Toubro (L&T), up 2.07 per cent at Rs 1,382.55; and HDFC Bank, up 1.74 per cent at Rs 1,199.60.
Major Sensex losers were: Lupin, down 0.91 per cent at Rs 1,503.20; Gail, down 0.74 per cent at Rs 424.80; Cipla, down 0.45 per cent at Rs 566.55; Reliance Industries, down 0.31 per cent at Rs 992.75; and Tata Motors, down 0.10 per cent at Rs 459.35.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)