Equity benchmark indices traded in a narrow range on Tuesday but closed with a positive bias as hopes of interest rate cut receded following a surge in inflation.
Sunil Sinha, Principal Economist at the India Ratings and Research (Ind-Ra), said the Reserve Bank of India (RBI) is unlikely to utilise the limited window for a rate cut in its February monetary policy review.
While retail inflation print for December came at 7.35 per cent, up from 5.54 per cent in November, wholesale inflation inched up to 2.59 per cent.
Still, the BSE S&P Sensex closed 93 points higher at 41,953 while the Nifty 50 moved up by 33 points at 12,362. Sectoral indices at the National Stock Exchange were mixed with Nifty FMCG kicking up by 1.4 per cent.
Among stocks, Vedanta emerged as the top winner with gains of 2.87 per cent at Rs 165.05 per share. FMCG majors Britannia, ITC and Nestle India advanced by 2.3 per cent, 1.6 per cent and 1.3 per cent respectively.
Auto majors Hero MotoCorp and Mahindra & Mahindra moved up by 2 per cent and 1.3 per cent while IT czars Tech Mahindra and HCL Technologies gained by 1.3 per cent and 1.2 per cent respectively.
However, banking stocks fell with Yes Bank plunging by 8.3 per cent, IndusInd Bank by 4 per cent, Kotak Mahindra Bank by 0.7 per cent and State Bank of India by 0.8 per cent.
Index heavyweight Reliance Industries slipped by 0.95 per cent to Rs 1,529.10 per share. The other prominent losers included Larsen & Toubro, Tata Motors and Ad Ports.
Meanwhile, Asian shares hit a seven-month high with the Nikkei 225 climbing over 0.7 per cent while the Kospi was up by 0.4 per cent.
The moves came as a Chinese delegation arrived in Washington ahead of Wednesday's signing of the phase one trade agreement. The lingering trade war between the world's two largest economies has cast a shadow over the global economy.
( With inputs from ANI )