Extending gains for the second session, the Sensex and Nifty closed higher led by pharma, metal, auto and banking stocks amid buying by foreign and domestic institutional investors. While the Sensex rose 142 points or 0.40 percent to 35,898.35, the Nifty gained 54.40 points, or 0.51 per cent, to 10,789.85.

Top Sensex gainers were Tata Motors (2.94%), Vedanta (2.78%) and ONGC (2.05%). Of 30 Sensex stocks, 17 closed in the green. YES Bank (1.33%) , Infosys (0.91%) , Maruti Suzuki (0.76%) and Coal India (0.74%) were the top Sensex losers.

On Wednesday, the 30-share Sensex settled 142.09 points, or 0.40 per cent higher at 35,898.35. The broader NSE Nifty gained 54.40 points, or 0.51 per cent, to 10,789.85.

Meanwhile, the mid cap and small cap indices closed 123 points and 141 points higher on the BSE. Consumer durables stocks led the gains with the BSE index rising 216 points to 21,321. BSE healthcare index too ended 128 points higher at 13,506.

Of 19 BSE sectoral indices, 17 ended in the green.  IT stocks indices ended in the red. Market breadth was positive with 1583 stocks closing in the green compared to 969 ending in the red on the BSE. Shares of ICICI Bank ended up 1.8 percent, while those of Indiabulls Housing Finance added around 6 percent. Reliance Industries, the top boost on the NSE Nifty, closed 1 percent higher.

State-run lenders held onto gains from earlier in the day on the government's capital infusion programme. Central Bank of India Ltd closed up 6.9 percent, while Syndicate Bank Ltd ended 3.4 percent higher. Infosys ended about 1 percent lower.

On a net basis, foreign portfolio investors (FPIs) bought shares worth a net of Rs 713.47 crore on Thursday, and domestic institutional investors (DIIs) were net buyers to the tune of Rs 113.27 crore, provisional data available with BSE showed.

Meanwhile, MTNL share price closed higher on Thursday amid reports that the Digital Communications Commission discussed plans for the revival of MTNL and BSNL. MTNL share price gained 19.48% intra day to 14.35 level compared to the previous close of 12.01 level. The share closed 15.65% higher at 13.89 level on BSE.

Tech Mahindra share price closed higher by 1.07% to 820.40 in trade today after the IT firm announced a Rs 1,956-crore buyback of its shares at Rs 950 apiece, a 14.59 per cent premium over current trading price. Tech Mahindra share price rose 3.49% to 840.10 level intra day compared to the previous close of 811.75 on the BSE.

The Aarti Industries share price rose in early trade today after the firm engaged in pharma and chemical businesses said it has bagged a Rs 900-crore contract to supply specialty chemical intermediate to a global firm.

Aarti Industries share price rose 9.33% to Rs 1,431.45 level intra day compared to the previous close of 1,309.30 on the BSE. It closed 5.48% higher at 1381 on the BSE.