Both the key indices closed on a flat-to-positive note after a volatile session of trade. Healthy buying was witnessed in healthcare, fast moving consumer goods (FMCG) and energy stocks.
The wider 51-scrip Nifty of the National Stock Exchange (NSE) edged up by 15.95 points or 0.18 per cent to 8,742.55 points.
The barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 28,398.33 points, closed at 28,412.89 points -- up 40.66 points or 0.14 per cent from its previous close at 28,372.23 points.
The Sensex touched a high of 28,454.02 points and a low of 28,311.11 points during the intra-day trade.
The BSE market breadth was slightly tilted in favour of the bulls -- with 1,466 advances and 1,271 declines.
On Wednesday, both the key Indian indices had closed on a flat note, prompted by negative global cues, outflow of foreign funds and disappointing macro-data.
The barometer index had risen by 18.69 points or 0.07 per cent, while the NSE Nifty edged up by 11 points or 0.13 per cent.
Initially on Thursday, the benchmark indices opened in the green, despite negative global cues.
Investors were cautious ahead of Bank of England's (BoE) monetary policy review.
Besides, increased possibility of a US rate hike kept the global and local markets subdued.
The US Fed's FOMC (Federal Open Market Committee) will meet on September 20-21.
A hike in US interest rates can potentially lead FPIs (Foreign Portfolio Investors) away from emerging markets such as India.
It is also expected to dent business margins as access to capital from the US will become expensive.
In addition, a fall in the rupee value dented investors' sentiments.
The rupee depreciated by 12 paise to 67.02 against a US dollar from its previous close of 66.90 to a greenback.
Nevertheless, the key indices managed to pare their losses during the last hour of the day's trade, mainly due to short covering and value buying at lower levels.
"Benchmark indices ended trade in the green for the second day running led by short covering in last hour of trading," said Nitasha Shankar, Senior Vice President for Research with YES Securities.
"Broader markets ended trade on a mixed note. The midcap index ended higher by 0.15 per cent while the small cap index ended absolutely flat."
According to Dhruv Desai, Director and Chief Operating Officer of Tradebulls, the CNX Nifty traded with sideways sentiments throughout the session on short covering and volatile USD/INR futures prices.
"The bank Nifty traded down due to profit booking at higher levels. IT stocks faced resistance at higher levels throughout the session," Desai said.
"Pharma and auto stocks managed to hold the early gains throughout the session on value buying at lower levels. Oil and gas stocks recovered well from lower levels in second half of the session."
Desai added that aviation stocks witnessed firm sentiments throughout the session tracking bearish crude oil prices.
In terms of investments, provisional data with the exchanges showed that the foreign institutional investors (FIIs) purchased stocks worth Rs 345.42 crore, whereas the domestic institutional investors (DIIs) divested scrip worth Rs 456.91 crore.
Sector-wise, the S&P BSE healthcare index gained by 85.64 points, followed by the FMCG index, which edged up 57.46 points, and the energy index rose by 12.78 points.
On the other hand, the S&P BSE banking index plunged by 133.56 points, the consumer durables index edged down by 123.33 points, and the automobile index fell by 84.45 points.
Major Sensex gainers during Thursday's trade were: Reliance Industries, up 1.63 per cent at Rs 1,062.45; Maruti Suzuki, up 1.47 per cent at Rs 5,443.35; Cipla, up 1.35 per cent at Rs 584.45; ITC, up 1.23 per cent at Rs 255.10, and HDFC, up 1.19 per cent at Rs 1,409.10.
Major Sensex losers were: Power Grid, down 2.40 per cent at Rs 174.95; Axis Bank, down 2.25 per cent at Rs 588.75; Hero MotoCorp, down 1.86 per cent at Rs 3,522.60; Tata Steel, down 1.83 per cent at Rs 366.90; and Bajaj Auto, down 1.61 per cent at Rs 2,931.95.
