The Bank Nifty, which had fallen for six straight days, gained 0.8 per cent. Shares in PNB, India's second largest state-run lender, closed 5.8 per cent higher on account of lower-than-expected rise in non-performing loans in the December quarter.
PNB's Q3 results helped lift sentiments across banking stocks. Bank of Baroda gained 3.2 per cent higher, while State Bank of India with 0.5 per cent higher.
State-run lenders have been under pressure over concerns of deteriorating asset quality amid a sluggish economy and fears had risen after PNB's blue chip private sector rival ICICI Bank reported a rise in corporate defaults.
Buying was also seen in IT, realty, metal and energy stocks.
However, auto stocks came under selling pressure, with Tata Motors falling 3.4 per cent.
Hero MotoCorp, which missed Q3 profit estimates on account of higher input costs and currency fluctuations, fell 1.5 per cent