Indian shares ended higher on Wednesday, as financial stocks recovered from profit-taking in late afternoon trade after the government said it was working on another stimulus package.
The Nifty closed up 0.34% at 11,937.65, while the Sensex ended 0.4% higher at 40,707.31.
The Nifty Volatility Index rose as much as 3.8% during the session to a near four-week high.
The Nifty 50 retreated as much as 1.02% in afternoon trade after crossing the psychological 12,000-mark, hit by a sharp fall in bank stocks that regained ground later to help the Nifty Bank index close 1.33% higher.
India's government is working on the next stimulus package to support the economy amid positive signs of a fall in COVID-19 cases, a senior finance ministry official said on Wednesday.
Financials were the top boosts on the blue-chip index, with top lender HDFC Bank, HDFC Ltd and ICICI Bank Ltd adding between 1.4% and 1.9%.
"Markets had strong resistance at 12,000 levels from where we are witnessing profit-booking," said Rahul Sharma, market strategist and head of research at Equity99 markets.
Reliance Industries Ltd was the top drag, ending the day 1.5% lower after having risen as much as 1.7% earlier in trade.
Tata Steel Ltd added 2.9%, among the top gainers on the Nifty 50. The Nifty Metals Index ended the day 2.23% higher.
Meanwhile, global sentiment improved on signs of progress towards a new U.S. coronavirus relief package.