The Sensex, which had touched a 40-month low in the previous day's trading, moved between 8,501.46 and 8,373.24 points during the day before closing at 8,446.49.

In a similar fashion, the 50-share National Stock Exchange index Nifty rose by 22.80 points to 2,645.20. It moved between 2,655.70 and 2,611.95 as trading volumes remained restricted.

Metal stocks, led by Sterlite Industries, rose on optimism that the Chinese government will increase infrastructure spending. The metal sector index gained the most by 2.80 per cent at 4,546.95.

China, the world's largest consumer of metals, is believed to be mulling a new stimulus package. Sterlite Ind rose by 3.11 per cent to Rs 245.40 and Hindalco Industries, the largest aluminum maker, by 3.35 per cent to Rs 38.55.

Tata Steel, the country's major steel producer, rose by 0.64 per cent to Rs 156.70 and JSW Steel by 4.34 per cent to Rs 177.95 on expectations that the Chinese government might announce the package at the opening of the annual meeting of lawmakers on Thursday.

Bank stocks, however, pulled down the market to some extent as the segment index suffered the most, by 1.50 per cent, to 3,889.71, following a steep fall in the ICICI Bank scrip by 4.08 per cent to Rs 284.30, its lowest since October 2004.

The bank stocks also fell as the rupee tumbled to a record low of 52.185 to the dollar on Tuesday and has dropped more than 6 per cent this year, raising fears of a fall in export-import revenues.

The oil and gas sector index rose 1.15 per cent to 5,842.25, the healthcare index 1.05 per cent to 2,581.30, the auto index 0.92 per cent to 2,642.23, the IT index 0.67 per cent to 2,032.81, and the PSU index by 0.59 per cent to 4,814.49.

The FMCG index rose by 0.47 per cent to 1,950.22, the realty index by 0.35 per cent to 1,370.42 and the tech index by 0.34 per cent to 1,662.22.

Among other weak sectors, the consumer durables segment index lost 1.46 per cent to 1,474.49, the capital goods index by 0.34 per cent to 5,624.87 and the power index by 0.09 per cent to 1,669.90.