The BSE Sensex nudged higher on Wednesday, a day after the RBI indicated it would support growth, raising expectations for more foreign fund investments.
Software services exporters Infosys (INFY.NS) and Tata Consultancy Services (TCS.NS) climbed 1 and 1.5 percent respectively, while Tata Motors (TAMO.NS) gained 2.2 percent.
By 10:44 a.m. (0514 GMT), the main 30-share BSE index was up 0.3 percent, at 17,050 with 18 of its components gaining.
Trading was volatile because of the expiry of monthly derivatives contracts later in the day.
For the time being the market should consolidate before it starts upward journey again, said K.K. Mital, head of portfolio management services at Globe Capital.
The benchmark index has gained 10 percent since the start of the New Year, with foreign funds buying shares worth more than $1 billion, and traders said there would be profit-taking.
The index fell a quarter in 2011 as foreign funds pulled out about $500 million after a series of rate increase by the RBI hit growth.
On Tuesday, the Reserve Bank of India slashed cash reserve requirement for banks by 50 basis points to help ease tight liquidity, but kept rates unchanged due to high core inflation.
Top home finance company Housing Development Finance Corp (HDFC.NS) gained 1.3 percent.
The 50-share NSE index was up 0.24 percent at 5,140.15. In the broader market, there were two gainers for every loser, with 234.6 million shares changing hands.
Non-ferrous metals maker Sterlite Industries (STRL.NS) firmed 2.4 percent, buoyed by gains in copper prices in London.
Biocon (BION.NS), the country's leading listed biotechnology company, fell as much as 4.4 percent after its quarterly net profit dropped a worse-than-expected 15.8 percent.
Cairn India (CAIL.NS) rose as much as 4.23 percent after the oil explorer reported a 12.5 percent rise in its December quarter earnings after market hours on Tuesday.
The MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.7 percent.
STOCKS ON THE MOVE
* Kale Consultants (KALE.NS) jumped 17.6 percent, after the company said late on Tuesday its board would consider a share buyback proposal at a meeting on February 1.
* Tata Global Beverages (TAGL.NS) rose 2.4 percent, Indian Hotels Company (IHTL.NS) gained 0.8 percent and Bank of Baroda (BOB.NS) climbed 1.3 percent ahead of the their quarterly earnings.
* GMR Infrastructure (GMRI.NS) rallied 2.8 percent after an official told Reuters late on Tuesday, the company withdrew its bid to modernise and expand an airport in Croatia but is preparing to bid on similar projects in Brazil.
* Kale Consultants (KALE.NS) jumped 17.6 percent, a day after the company said its board would consider a share buyback proposal at a meeting on February 1.
TOP 3 BY VOLUME
* Suzlon Energy (SUZL.NS) with 14.6 million shares
* Unitech (UNTE.NS) with 9.5 million shares
* Tata Motors (TAMO.NS) with 6.5 million shares