Government data showed India's GDP growth quickened to 7.4 percent in the July-September quarter, from 7 percent in the previous one, which propped up sentiment. The rupee strengthening by 23 paise to 66.44 (intra-day) against the dollar during the day also helped.

A higher closing in Asia after investors took positives from Chinese economic data that showed manufacturing contracted to the lowest in three years and a better opening in Europe influenced mood.

The BSE Sensex took off on a positive note and advanced further before settling higher by 23.74 points, or 0.09 percent at 26,169.41, a level last seen  November 6. Higher levels could not be sustained as participants locked in gains. The gauge had gained 369.92 points in the previous three sessions.

The NSE Nifty also moved up 19.65 points, or 0.25 percent, to 7,954.90 after shuttling between 7,972.15 and 7,934.15.

Stocks of metal companies led by Vedanta Ltd, Tata Steel and Hindalco were back in limelight and gained up to 4.66 percent after global metal prices climbed. RBI Governor Raghuram Rajan today kept the key policy rates steady, but affirmed the central bank's commitment to
ease rates as and when room is available, saying inflation which guides its stance is likely to come in better than expected.

RBI left the short-term lending rate, or repo rate, unchanged at 6.75 percent, and the cash reserve ratio static at 4 percent. The central bank also retained the GDP projection unchanged at 7.4 percent with a moderate downward bias.

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