The Nifty closed up 0.56% at 11,535, while the Sensex ended 0.48% higher at 39,086.03.
After trading range-bound for most of the session, both indices gained in late afternoon trading as European stocks and U.S. futures advanced after manufacturing data from major economies indicated that they were recovering from the damage caused by the COVID-19 pandemic.
Investors also looked past concerns around heightened border tensions, after India accused China of "provocative actions" on Tuesday.
"Market has digested all the (negative news of late) and now we are seeing some buying interest emerging in select pockets, especially the autos, after the better-than-expected auto numbers, while the global market support is there anyway," said Ajit Mishra, vice president, research at Religare Broking.
Heavyweight conglomerate Reliance Industries was the top boost to the Nifty, which closed 2% higher.
The Nifty auto index closed up 1.15% after top automakers such as Maruti Suzuki India Ltd posted higher August sales.
Mahindra and Mahindra Ltd and Escorts Ltd also reported higher August tractor sales, pointing to strength in the agrarian sector.
However, two- and three-wheeler maker Bajaj Auto Ltd fell 2.6% after reporting a fall in sales, and was the top laggard on the Nifty.
State-run Oil and Natural Gas Corporation Ltd closed 1.2% higher after reporting a better-than-expected June-quarter profit on Tuesday evening.
Coal India Ltd, due to announce quarterly results later in the day, closed up 2.1% after reporting a rise in August production.
By Anuron Kumar Mitra