It was a mixed day for power utilities, with Tata Power surging to a nearly 1-1/2 month high after the regulator allowed it to raise tariffs, although NTPC plunged to a more than 5-year low as the order was seen as negative for the state-run firm.
Indian equities are expected to remain supported as overseas investors have been net buyers of nearly $430 million over the last eight sessions.
The Sensex rose 0.53 per cent, or 110.69 points, to end at 20,811.44. The Nifty rose 0.5 per cent, or 30.65 points, to end at 6,186.10.
Among stocks, Axis Bank rose 3.8 per cent, while Larsen and Tubro ended 2.8 per cent higher.
Tata Power closed up 5.1 per cent after the federal power regulator said it could raise tariffs for electricity from its plant in Mundra in India's Gujarat state, a decision also likely to boost its earnings outlook.
Pfizer surged 9.7 per cent after earlier marking its highest intraday level since December 9, after the company said a unit of its parent Pfizer Inc will buy close to a 61 per cent stake from two other units after an internal restructuring.
Info Edge India shares ended 1.8 per cent higher. It earlier hit its all-time high of Rs. 708.05 on news Facebook Inc's $19 billion offer for mobile-messaging startup WhatsApp was seen raising valuations for internet-based companies.
Icra shares rose 20 per cent, its maximum daily limit, after largest shareholder Moody's Corp, announced a conditional open offer to acquire up to 2.6 million shares in it at Rs. 2,000 a share for about $84 million.
However, shares of another rating agency Credit Analysis and Research fell 8.4 per cent after the company said bids for a share sale by stakeholders were rejected "after no bid was found acceptable".
NTPC also slumped 11.8 per cent, after earlier marking its lowest level since October 27, 2008, after the electricity regulator tightened incentives on capacity utilisation and tax treatments for the state-owned company, according to analysts.