A total of 26 of the Nifty 50 stocks ended lower as against 24 which advanced. Sharp gains were seen in telecom and PSU Bank stocks.
The Sensex closed 185.51 points or 0.46 per cent higher at 40,469.70 after flip-flopping between the high of 40,544.13 and a low of 40,290.21.
The Nifty also added 55.60 points or 0.47 per cent to end at 11,940.10.
Bharti Airtel advanced by 8.66 per cent to Rs 444 apiece on the NSE, while Vodafone Idea zoomed up by 38.20 per cent to Rs 6.15 a share. Gains in the telecom stocks came after reassuring statements from the government on the crises faced by the sector.
"We have seen a rapid move in the sentiment into the telecom sector from extreme pessimism to frenzy buying especially for Vodafone Idea and Bharti Airtel," said Santosh Meena, Senior Analyst, TradingBells.
"..Everyone on the street was worried about the huge loss posted by the telcos after the Supreme court verdict on AGR issue but the market took this as 'worst is over' scenario," Meena added.
Nifty PSU index ended nearly 4 per cent higher over investors renewed confidence in the sector after the SC order in the Essar Steel case last week.
Oriental Bank of Commerce, up 20 per cent and Syndicate Bank, up 13 per cent. Central Bank of India gained over 7 per cent followed by Union Bank, J&K Bank, up in the range of 7 to 10 per cent. PNB and SBI advanced in the range of 1 to 3 per cent.
This comes after the Supreme Court last week cleared the way for global steel giant ArcelorMittal's Rs 42,000 crore acquisition of debt-laden Essar Steel, after a two-year-long legal battle that tested India's bankruptcy law.
( With inputs from IANS )