The Sensex finished at 40,286.48, higher by 170.42 points, and the Nifty gained 30 points at 11,870.45. While the BSE midcap index ended 0.14 per cent higher, the BSE SmallCap ended marginally lower.
"Trend of the market is dictated by macro releases, as WPI inflation numbers indicated weak demand in the manufacturing segment. RBI is likely to give more focus on growth, rather than rising inflation in the near term, which may influence a few more rate cuts," said Vinod Nair, Head of Research, Geojit Financial Services.
Vodafone Idea on Thursday crashed 21 per cent on Thursday over reports that the Department of Telecommunications has asked the telecom firms to pay their revenue share dues within three months.
SpiceJet lost nearly 6 per cent to settle ay Rs 106.95 apiece after dismal Q2 numbers. The budget carrier on Wednesday reported a loss of Rs 461.22 crore for the quarter ended September.
Globally, Asian stocks were mixed on Thursday after China posted weaker than expected economic data. European stocks traded slightly lower on Thursday as trade negotiations between the US and China are understood to have hit a roadblock, said Deepak Jasani of HDFC Securities.
The October wholesale price index (WPI)-based inflation data released on Thursday at 0.16 per cent registered a 40-month low, from 5.54 per cent recorded in the same month last year.
Also on Thursday, US rating multinational Moody's Investors Service cut India's economic growth forecast for the current fiscal to 5.6 percent, from 5.8 percent estimated earlier, saying the country's GDP slowdown prolonging beyond previously expected.
( With inputs from IANS )