However, outflow of foreign funds coupled with a weak rupee and NBFC induced liquidity crisis capped gains.
The S&P BSE Sensex closed 86.18 points or 0.22 per cent higher at 39,615.90 points, while the NSE Nifty50 was up 26.90 points or 0.23 per cent at 11,870.65 points.
Sectorally, the top gainers were the BSE telecom, bankex and consumer durables indices, whereas the top losers were the BSE power, realty, healthcare and metal indices.
"Markets ended with modest gains after a volatile session that saw the Nifty witnessing a roller coaster ride. Action however was range bound across sectors as none of the sectors closed more than '+/- 1 per cent' compared to their previous close," said Deepak Jasani, Head of Retail Research, HDFC Securities.
"Technically, while the Nifty has bounced back, the short term trend remains down. Further downsides are likely once the immediate support of 11769 is broken. Any pullback rallies could find resistances at 11897-11929 band."
According to Vinod Nair, Head of Research, Geojit Financial Services: "On-going funding challenges faced by NBFCs prompted investors to focus on to select banking stocks while weak rupee add some impetus to IT stocks."
"The global central bank is moving to a rate cut cycle to combat weaker growth which supported Asian and European markets but trade war concerns continue to limit gains. Investors to remain focused on fresh triggers in the upcoming union budget and US job data to get cues on further direction."
In terms of investment, both foreign and domestic institutional investors (FIIs/DIIs) sold stocks. FIIs off-loaded stocks worth Rs 478.84crore, while DIIs bought stocks to the tune of Rs 179.79 crore.
On the currency front, the rupee on Friday weakened by 21 paise to 69.48 per US dollar from its previous close of 69.27.
( With inputs from IANS )