The BSE Sensex rose on Thursday as auto makers and property developers gained on hopes of increased sales of big-ticket items during the looming festival season, while lenders rose on hopes of higher retail loan demand.
Domestic shares gathered momentum after a slew of Chinese data boosted optimism about the health of the world's second-largest economy, sending Asian indexes higher.
Earnings results will continue to impact sentiments in the near term, with Tata Consultancy Services Ltd and ITC Ltd due to report results on Friday.
Amid increased volatility due to the earning season, investors are also focussing on the central bank's stance on interest rates at its next meeting on October 30.
"It's a pre-Diwali cheer in the market. A lot depends on the announcements and direction from New Delhi," said P. Phani Sekhar, fund manager-PMS at Angel Broking.
"We believe the floor of the market is around 5,400, although any immediate upside looks difficult. Earnings seem to be more or less discounted."
0.97 percent, or 181.16 points, to 18,791.93.
The Nifty rose 1.03 percent, or 58.45 points, to 5,718.70.
Shares in banks, property and auto gained on hopes of higher consumer spending during the Dussehra festival on October 24 and the Diwali festival in mid-November, which are considered auspicious times to buy big-ticket items such as vehicles and property.
State bank of India gained 2.9 percent while private lender Axis Bank rose 4.2 percent.
Property developer DLF ended 2 percent up, while India Bulls Real-estate gained 7.5 percent.
Sobha Developers rose 2.3 percent. Private equity firm Sun-Apollo will invest up to $50 million in projects developed by Indian real estate company Sobha Developers, sources with direct knowledge of the matter told Reuters.
Tata Motors rose 2 percent, while two-wheeler maker Hero MotoCorp added 1.8 percent.
Cement maker ACC Ltd ended 0.8 percent lower after July-September profit missed market estimates.
ACC reported a 57 percent jump in net profit at 2.49 billion rupees. Analysts expected a profit of 2.87 billion rupees on revenue of 25.55 billion rupees, according to Thomson Reuters I/B/E/S.
United Breweries fell 1.5 percent after UBS downgraded the stock to 'sell' from 'buy' and cut its target price to 625 rupees from 650 rupees.
Shares in Sun Pharmaceutical Industries fell 1.6 percent on worries the drug maker will soon see an end to its temporary arrangement to supply cancer drug Doxil in the United States.
Bharti Airtel fell 1.7 percent after the Telecom Commission recommended mobile phone carriers give up all their airwave holding in the 900 mega hertz band at the time of their permit renewals.
The move is opposed by the wireless industry which says it will cost about $24 billion more in capital outlay.
Ahead of Friday's earnings, cigarette maker ITC rose 1.16 percent while TCS gained 1.9 percent.
TCS is expected to report a 35 percent rise in quarterly profit at 33.1 billion rupees, Thomson Reuters data showed, while its CEO N. Chandrasekaran is bullish about the company's performance.
The outlook is "looking good, looks positive, there's no negative news," he said on Sept 25.