Markets traded off the day's high though the rupee recovered and traded at 53.38 to the dollar.
Defensive stocks such as ITC gained on value buying after recent declines as investors churned in favour of cyclicals and high-beta stocks, betting on additional government reforms and global liquidity from the U.S. Fed's new asset purchase programme.
Cigarette maker ITC gained 1.5 per cent, while Hindustan Unilever traded 1.2 per cent higher. Drug makers like Cipla and Ranbaxy also saw strong buying interest on value buying. Cipla had fallen 8.7 per cent decline in last eight sessions.
Shares in Axis Bank fell 2.6 per cent on concerns over credit provided to Indonesia's PT Bumi Resources, whose parent company, Bumi Plc, launched an investigation into alleged financial irregularities at its Indonesian operations.
Among other stocks, realty shares saw strong gains, rising 2.4 per cent, while metal stocks saw profit booking and traded with nearly 1.5 per cent losses. Shares exposed to state-owned electricity distributors succumbed to profit-booking after the government approved a bailout plan for the cash-strapped utilities.
Private steel maker JSPL was the top Nifty loser, down 4 per cent followed by Cairn India, which traded 3.8 per cent lower on the back of a block deal.
25 of the 50 stocks traded higher on the Nifty. The market breadth was positive with 54 per cent stocks rising on the broader BSE 500.
Global cues weighed on sentiments. European shares were flat as investors remained concerned about global growth and waited for Spain to unveil plans to resolve its fiscal problems.
(With inputs from Thomson Reuters)